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Inflation level
In September 2008 the consumer prices went up as compared to August 2008 by 0.6%, including for foodstuff products by 1.3%, for non-foodstuff products by 0.1% and for services rendered to the population by 0.7% (chart no.1).
chart no. 1. Monthly evolution of consumer prices index (CPI) and of the industrial producer prices index (IPPI) (chart)
Bigger rises for foodstuff products were recorded for salt – by 11.4%, for dietetic eggs – by 7.3%, for vegetables – by 6.8%, for meat, meat products and canned meat – by 1.8%, for milk and dairy products – by 1.2%, for fresh fruit – by 0.7%, for fish and canned fish, citrus plants and strong drinks – by 0.5%, each, for miller’s and bakery products – by 0.3%.
The largest prices reductions, as compared to the previous month were recorded for soft drinks – by 2.4%, for rice – by 1.6%, for vegetal oil – by 1.5%, for sugar – by 1.0%, for butter – by 0.2%.
Within the category of non-foodstuff products prices increases were spotted for children’s ready-made clothes – by 2.0%, for carpets and rugs – by 1.6%, for furniture and printed editions – by 0.9%, each, for knitted wear – by 0.8%, for adults’ ready-made clothes – by 0.6%, for detergents – by 0.6%, for footwear – by 0.4%. Significant reductions were recorded for fuel – by 2.4%, drugs – by 0.1%.
Within the group of services rendered to the population tariffs went up for: education – by 2.5%, dwellings’ reparation and maintenance – by 2.1%, public catering – by 1.6%, footwear manufacturing and mending – by 1.6%, public utilities – by 0.8%, medical healthcare – by 0.3%.
From the beginning of the current year the consumer prices advanced by 6.7%, including for foodstuff products – by 4.9%, for non-foodstuff products – by 3.6%, for rendered services – by 14.2%.
The inflation level in September 2008 versus September 2007 constituted 10.7%, including for foodstuff products – 10.6%, for non-foodstuff products – 7.4% and for services rendered to the population – 16.3%.
Components’ contribution to consumer prices index formation is shown in table no. 1.
Table no. 1. Components’ contribution, % (table)
In September 2008 the industrial production prices enlarged by 0.5% versus August 2008 (chart no. 1). Within the basic activity – processing industry, prices recorded an increase by 0.6%, while the highest rises of prices were recorded for the following activities: tobacco articles manufacturing – by 7.7%; wood processing and wood articles production – by 7.4%; metallurgy – by 5.2%; manufacturing of miller’s products, of starch and starch products – by 4.0%; manufacturing of textiles and of distilled strong drinks – by 3.9%, each; production, processing and preserving of meat and meat products – by 3.7%; paper and cardboard production – by 3.5%; machinery and equipment production, manufacturing of clothes items; fur preparing and dyeing – by 2.4%, each.
At the same time, prices reductions were noted within the activities: fruit and vegetables processing and preserving – by 3.1 %; chemical industry – by 1.8%; manufacturing of cocoa, chocolate and confectionery products – by 1.6%; manufacturing of electrical machines and devices – by 0.7%; dairy products manufacturing – by 0.4%.
Prices increased by 0.5% and 0.1% within the mining and quarrying industry and for energy, heating, gas and water supply, accordingly.
The industrial production prices advanced by 8.9% as compared to September 2007, and from the beginning of 2008 – by 6.2%.
The industrial production prices index for domestic market increased in September 2008 versus August 2008 by 1.7%. From the beginning of the current year, the industrial production prices for the domestic market advanced by 14.4%, while versus September 2007 – by 17.7%.
Monetary policy instruments
Sterilization operations
During September 2008 the National Bank of Moldova intervened in the money market to perform the excess liquidity sterilization and placed NBM Certificates with circulation terms of 7 and 14 days. Banks’ demands were integrally met within those 19 auctions and the volume of certificates was traded at selling price.
The average weighted interest rate on sterilization operations recorded a slight increase as compared to the previous month and recorded in September 2008 the value of 18.33% per year.
The minimum value of the daily balance of sterilizations in the course of the month constituted 763.6 million lei, while the maximum value – 1702.8 million lei, and accounted for 990.7 million lei as of September 30, 2008 (chart no. 2).
chart no. 2. Balance of NBM sterilization operations (chart)
The daily average balance of sterilization operations in September 2008 advanced by 113.7 million lei, or by 9.6% as compared to the level reached during the previous month and equalled to 1302.6 million lei.
Standing facilities
In September 2008 banks resorted frequently to the overnight deposit facility. The daily average balance of overnight deposits constituted 72.1 million lei, increasing by 9.5 million lei, or by 15.2% versus August 2008.
During the analyzed month only one bank applied for the overnight credit facility in an amount of 73.8 million lei.
Required reserves
Required reserves in MDL related to the tracing period of attracted funds September 6 – 20, 2008 and maintained by banks in the period of September 21 – October 5, 2008 totalled 3525.6 million lei, increasing by 57.6 million lei (1.7%) versus the reserves maintained by banks in the period of August 21 – September 5, 2008.
As of September 30, 2008 the required reserves maintained by banks in free convertible currency (FCC) accounted for USD 127.3 million and EUR 141.3 million, advancing by USD 5.6 million (4.6%) and by EUR 7.0 million (5.2%) versus the end of August 2008.
At its meeting of September 25, 2008 the Council of administration of the National Bank of Moldova set out the required reserves ratio from funds attracted in MDL and in free convertible currency, starting with the tracing period of funds attracted in the period of October 6 – October 20, 2008, in an amount of 20.5% from the calculation base.
Interest rates
The Council of administration of the National Bank of Moldova, taking into account the evolution of the monetary and macroeconomic indicators, as well as the inflation level, approved at its meeting of September 25, 2008 the interest rates on the NBM monetary instruments (in application since 30.09.2008):
- Base rate applied on the main short-term monetary policy operations – 17.0% per year (decreasing by 1.5 percentage point);
- Rate on overnight credits – 18.0% per year (decreasing by 3.0 percentage points);
- Rate on overnight deposits accepted by the National Bank of Moldova – 2.0% per year (at the previous level).
Base rate on credits extended for long-term (over 5 years) was kept at the level of 10.5% per year.
During the reported month the volume of state securities offered weekly at auctions by the Ministry of Finance did not change versus the previous month.
Compared to August 2008 the demand of state securities with terms of up to 1 year recorded a slight increase. At the same time, the volume of 2-year state bonds demanded by banks was less as compared to the previous month, the placement reached the level of 60.5%.
The volume of state securities offered for placement in the primary market by the Ministry of Finance constituted 188.0 million lei (chart no. 3). Banks’ demand of state securities totalled 395.3 million lei, and exceeded the supply 2.1 times. SS sales constituted 184.8 million lei, while the supply of the Ministry of Finance was placed in an amount of 98.3%.
chart no. 3. Total SS trading auctions in the primary market (chart)
The weight of state securities purchased by non-bank investors in the total volume placed in the primary market diminished from 34.0% in August to 15.6% in September 2008, and accounted for 28.9 million lei. In September 2008 foreign investors purchased 4.0% of the SS sold volume, versus 18.0% in the previous month.
The average maturity of SS issued during the reported period lessened by 4 days, from 199 to 195 days, as a result of the drop in the share of 2-year state bonds, as well as of the increase in the weight of 182-day SS (chart no. 4).
chart no. 4. Structure of SS traded in the primary market, % (chart)
The average weighted interest rate on state securities with the maturity of up to 1 year, placed in the primary market in September 2008 recorded 19.27% per year versus 20.70% per year in August 2008.
Government’s debt contracted from the National Bank of Moldova
As of September 30, 2008 the state debt contracted from the National Bank of Moldova totalled 2213.4 million lei.
State securities obtained in the portfolio of the National Bank of Moldova as a result of the reissuances carried out in September 2008 displayed the maturity of 140 days. The interest rates on issued securities oscillated between 18.36 and 19.97% per year. The average weighted interest rate on SS within the portfolio recorded as of September 30, 2008 the level of 19.24% per year, by 0.41 percentage point more as compared to the level recorded at the end of August 2008. The average maturity of state securities from the portfolio equalled on the last day of the reported month to 70 days, being 13 days higher as compared to the average maturity on the last day of the previous month.
As a result of reflecting the calculated interest and of evaluation of SS held within the NBM portfolio at market prices, the balance sheet value of state debt equalled as of September 30, 2008 to 2289.6 million lei.
Deposits placed with the National Bank of Moldova
As of September 30, 2008 the balance of deposits placed with the National Bank of Moldova by the Ministry of Finance totalled 821.0 million lei, increasing by 250.0 million lei as compared to the end of August 2008.
The average weighted interest rate on deposits as of September 30, 2008 registered 17.13% per year, decreasing by 0.67 percentage point versus the end of the previous month. The average term of deposits accounted for 229 days.
Banks’ activity in the money market
In September 2008 the total volume of transactions in the money market, carried out by banks equalled to 733.2 million lei, increasing by 37.6 million lei, or by 5.4% versus August 2008. The majority share in the volume of interbank market transactions (93.4%) is represented through credit and deposit operations.
The volume of interbank credits /deposits went up as compared to August by 19.3 million lei, or by 2.9%, and accounted for the value of 684.7 million lei, of which overnight transactions accounted for 90.0%. The average weighted interest rate on interbank transactions constituted 17.20%, increasing by 1.36 percentage point as compared to the previous month, while the average weighted term of transactions scored 6 days.
The total volume of state securities selling-buying transactions, carried out in September 2008 in the secondary market totalled 48.5 million lei, increasing by 19.5 million lei versus August 2008. Bank-client transactions went up by 12.5 million lei and constituted 41.5 million lei (85.6% in the total volume of state securities operations).
The average nominal yield on state securities traded in the secondary market advanced by 0.06 percentage point as compared to August 2008, and recorded 18.84% per year on the background of the increase of the average weighted term until maturity from 65 to 88 days.
REPO operations, as well as transactions with NBM Certificates were not registered.
The interbank reference rates recorded as of September 30, 2008 the following values: CHIBOR overnight – 16.64%, CHIBOR 1 month – 19.39% and CHIBOR 3 months – 20.07%.
Credits and deposits market
Table no. 2. Indicators of credits market (MDL, million) (table)
The balance of credits to economy* enlarged by 1041.5 million lei (4.3%) as compared to the end of August 2008 and constituted 25417.4 million lei at the end of September 2008. This evolution was due to the increase of both the balance of credits in national currency by 257.5 million lei (1.7%), and of the balance of credits in foreign currency (expressed in MDL) by 784.0 million lei (8.2%).
*According to IMF methodology, out of total credits to economy (including the interest calculated on credits and on credits of banks under liquidation) are excluded interbank credits and credits to the Government.
The increase of the balance of credits in MDL was generated by the increase of the balance of credits extended to private sector by 161.2 million lei (1.8%) and of the balance of credits extended to individuals by 118.3 million lei (2.5%), while the balance of credits extended to state entities and the balance of credits to other organizations performing certain financial operations dipped by 1.5 million lei (0.6%) and by 20.5 million lei (1.9%), accordingly.
The balance of credits in foreign currency registered an increase determined by the growth of all components: balances of credits extended to state entities – by 8.6 million lei (7.9%), to private sector – by 701.8 million lei (8.4%), to other organizations performing certain financial operations – by 54.8 million lei (7.7%) and to individuals – by 18.8 million lei (5.7%)
Expressed in USD, the balance of credits in foreign currency constituted USD 995.7 million, increasing by USD 9.1 million (0.9%) versus August 2008.
The volume of credits in MDL in September 2008 constituted 1536.2 million lei, increasing by 112.0 million lei, or by 7.9% versus the previous month.
The weight of credits to businesses in the total volume of credits in national currency constituted 77.3%.
Within the maturity structure, credits in MDL with terms of over 12 months extended to businesses kept their maximum share and their weight downsized by 13.1 percentage points, to the level of 41.8% of total. They were followed by credits extended for terms of up to 1 month, which accounted for 29.8% of total (chart no. 5).
chart no. 5. Structure of credits in MDL extended by banks to businesses (chart)
In September 2008 the average interest rate on credits in national currency advanced by 0.23 percentage point, up to 22.99%, as a result of the increase of the average interest rate on credits extended to businesses by 0.25 percentage point, up to the level of 22.97% and of the average interest rate on credits extended to individuals by 0.12 percentage point, up to the level of 23.06%.
The volume of credits in foreign currency extended to businesses constituted 1137.6 million lei (equivalent of USD 114.6 million, increasing by USD 16.8 million versus August 2008).
Within their components, credits with terms of over 12 months prevailed (67.7% of total, increasing by 0.6 percentage point versus the previous month), being extended at an average interest rate of 12.00% (chart no. 6). At the same time, credits with terms of 1 to 3 months and from 6 to 12 months recorded a more emphasized descendant trend and their weight dropped by 0.8 and by 0.7 percentage point, respectively, and accounted for 0.9 and 18.3% of total.
chart no. 6. Structure of credits in foreign currency extended by banks to businesses (chart)
The average interest rate on credits in foreign currency extended to businesses went up by 0.56 percentage point, and accounted for 12.95% in September 2008.
At the end of September 2008 the balance of deposits within the banking system totalled 25179.6 million lei, increasing by 760.5 million lei (3.1%) versus the previous month on the account of the increase of the balance of deposits in foreign currency by 844.8 million lei (8.7%), while the balance of deposits in national currency dipped by 84.3 million lei (0.6%).
The balance of sight deposits constituted 6621.8 million lei, decreasing by 152.9 million lei versus August 2008. Their weight diminished by 1.4 percentage point, and equalled to 26.3% in the total balance of deposits.
Simultaneously, the balance of term deposits enlarged by 913.4 million lei (5.2%) and equalled to 18557.8 million lei.
The balance of term deposits in MDL constituted 10379.1 million lei at the end of September 2008, increasing by 76.2 million lei (0.7%) versus the previous month, as a result of the increase of the balance of deposits in MDL of individuals by 119.9 million lei, or by 1.4%, while the balance of deposits of economic agents fell by 43.7 million lei, or by 2.5%.
The balance of term deposits in foreign currency went up by 837.2 million lei (11.4%), and accounted for 8178.7 million lei.
The volume of term deposits in MDL attracted in September 2008 constituted 1323.9 million lei, by 309.7 million lei less as compared to August 2008. This reduction was determined by the decrease of the volume of deposits attracted from businesses by 249.4 million lei (41.1%), as well as by the reduction of the volume of deposits attracted from individuals by 60.3 million lei (5.9%).
Table no. 3. Indicators of term deposits market (MDL, million) (table)
At the same time, the weight of term deposits in national currency of individuals enlarged from 62.8% in August 2008 to 73.0% of the total volume of term deposits in national currency attracted over the analyzed period.
In September 2008 the deposits with terms of 3 to 6 months ran into 41.6% of total (increasing by 2.0 percentage points), and held the highest weight within the structure of term deposits in national currency. Simultaneously, the weight of deposits with terms of up to 1 month lessened by 10.9 percentage points and constituted 7.3% of total attracted deposits (chart no. 7).
chart no. 7. Structure of term deposits in MDL attracted by banks (chart)
The average interest rate on term deposits in MDL advanced over September by 0.15 percentage point and accounted for 18.99% (17.52% for businesses and 19.54% for individuals, versus 17.23 and 19.80%, accordingly, in August 2008).
During the reported period the attracted volume of term deposits in foreign currency constituted 1440.6 million lei (equivalent of USD 114.9 million), decreasing by 79.2 million lei (5.2%) on the account of the reduction of deposits of businesses by 131.0 million lei, or by 67.5%, while deposits of individuals went up by 51.8 million lei, or by 3.9%.
Changes within the term structure of deposits in foreign currency as compared to August 2008 denoted opposite trends for deposits with different terms. Thus, the weight of deposits with terms of 3 to 6 months, of 6 to 12 months and of deposits with the term of over 12 months recorded an increase (by 3.7 percentage points, up to the level of 47.8%, by 2.2 percentage points, up to the level of 40.4% and by 2.1 percentage points, up to the level of 4.4% of total deposits in September 2008, respectively), on the background of the weight reduction for deposits with terms of up to 1 month and of deposits with terms of 1 to 3 months (by 3.9 and 4.1 percentage points, accordingly) (chart no. 8).
chart no. 8. Structure of term deposits in foreign currency attracted by banks (chart)
During the reporting period the average interest rate on term deposits in foreign currency was kept at the level of 10.93% (8.77% for businesses and 11.03% for individuals).
Dynamics of monetary indicators
In September 2008 reserve money* dipped by 5.5% (660.1 million lei) and amounted to 11264.3 million lei. The main factor that grounded this reduction was the diminution of net domestic assets by 2093.6 million lei (59.4%) as a result of the decrease of the National Bank’s claims to banks by 18.7% (768.9 million lei), as well as of the claims to the Government – 2.0 times, or by 491.5 million lei.
At the same time, the reported period was characterized by the increase of the net external assets by 1433.4 million lei (9.3%), determined by the prevalence of foreign currency buying operations by the National Bank of Moldova in the domestic foreign exchange market.
Currency in circulation** dipped from 7328.6 million lei in August 2008 to 7176.5 million lei in September 2008.
* Reserve money includes currency in circulation (outside the banking system), banking reserves (banks’ reserves in MDL maintained on correspondent accounts with the National bank of Moldova and currency with banks’ vaults) and sight deposits of other organizations with the National bank of Moldova.
** Currency in circulation M0 represents currency put into circulation by the National Bank of Moldova, excluding the currency with the banks’ vaults and with the vault of the National Bank of Moldova.
Within the structure of reserve money the weight of currency in circulation went up from 61.5% in August 2008 to 63.7% in September 2008. At the same time, the share of banks’ reserves downsized from 38.5% to 36.3%.
Broad money M2* stepped back during the analyzed month by 234.9 million lei, or by 1.1%, down to 21796.3 million lei. At the same time, money supply M3** advanced by 609.8 million lei, or by 1.9% and constituted 32373.1 million lei at the end of September 2008 (table no. 4).
Table no. 4. Dynamics of money supply structure at period-end (MDL, million) (table)
* Broad money M2 includes currency in circulation (M0) and deposits in MDL.
** Money supply M3 includes broad money M2 and deposits in foreign currency of residents expressed in MDL.
The reduction of M2 monetary aggregate was determined by the decrease of the balance of currency in circulation by 152.0 million lei (2.1%) and of the balance of deposits in national currency by 84.3 million lei (0.6%), while the balance of money market instruments advanced by 1.4 million lei (8.8%).
Deposits in foreign currency (recalculated in MDL) enlarged by 844.8 million lei (8.7%). Expressed in USD, they advanced by USD 13.6 million. The weight of deposits in foreign curerncy, recalculated in MDL, in the total volume of money supply (M3) advanced from 30.6% in August 2008 to 32.7% in September 2008.
Net international (convertbile) reserevs of the banking system soared by USD 23.4 million, and totalled USD 1373.9 million. Within their structure, the NBM net international reserves went up by USD 30.7 million, while those of the banks reduced by USD 7.3 million.
External reserves of the banking system equalled in September 2008 to USD 2026.6 million, increasing by USD 49.6 million versus August 2008. The NBM external reserves went up by USD 28.3 million, to the level of USD 1803.9 million. The external liabilities of the banking system constituted USD 652.7 million, including those of NBM (to IMF) – USD 173.9 million*.
Net domestic assets of the banking system fell by 574.0 million lei (3.0%). In September 2008 the banking system’s claims on the Government of the Republic of Moldova reduced by 591.6 million lei.
* including accrued interest
The monthly official average rate of MDL against USD depreciated from MDL 9.6756 per USD 1 in August to MDL 9.9290 per USD 1 in September 2008 (chart no. 9). The official exchange rate of MDL depreciated from USD 9.6613 per USD 1 at the beginning of September 2008 to MDL 10.3580 per USD 1 at the end of the reported month.
The monthly official average exchange rate of MDL appreciated from MDL 14.5582 per
Monthly Bulletin Sept 2008.pdf, 267 Kb
