Since the beginning of the year, the Moldovan leu has depreciated by 25,5% against the dollar

Moldovan Leu has been experiencing the most dramatic moments in the entire history of its existence since 1993. He is rapidly getting cheaper. Since the beginning of the year, the leu has depreciated by 25,5 percent against the dollar and 17,8 against the euro.

The President of the National Bank of Moldova (NBM), Dorin Dragutanu, named three reasons for the sharp depreciation of the national currency. The first is the Russian embargo on the products of Moldovan agricultural producers. The ban on the import of Moldovan alcohol into the Russian Federation has been in effect since September 2013, and since July 2014 it has been prohibited to import fruits, vegetables and canned food.

The President of the National Bank sees the second reason for the fall of the leu in “a decrease in exports, which led to a decrease in the supply of currency on the market.” According to the National Bureau of Statistics, in 2014 Moldova reduced its foreign trade volumes. Compared to 2013, exports decreased by 3,7 percent, amounting to $2,34 billion.

Finally, the third reason is the decline in remittances from labor migrants, primarily from Russia. “Due to the devaluation of the Russian ruble in December, transfers from Russia fell by more than half,” Dragutanu said. At the end of 2014, remittances from Moldovan citizens from abroad amounted to almost 1,61 billion US dollars. Over 35 percent of them are transfers in Russian rubles. “The exchange rate of the national currency, like a mirror, reflects the situation in the economy, which was affected by these three shocks,” the chairman of the National Bank explained to reporters.