As of May 31, 2023, the National Bank of Romania’s foreign exchange reserves stood at EUR 53.08 billion, a slight decrease compared to the previous month, BNR officials reported on Friday.

• Income of 1.801 million euros representing: change in minimum reserves in foreign currency created by credit institutions in the National Bank of Ukraine; replenishment of accounts of the Ministry of Finance; financing of the account of the European Commission and others;

• An outflow of EUR 2,060 million, which represents: a change in the minimum reserves in foreign currency established by credit institutions in the BNR; installments and interest payments on the state debt account in foreign currency and others.

The level of gold reserves remained at the level of 103.6 tons. Under the conditions of the international price situation, its value was 6,110 million euros.

Romania’s international reserves (foreign currency plus gold) as of May 31, 2023 were EUR 59,192 million compared to EUR 59,355 million as of April 30, 2023.

Payments to be made in June 2023 on foreign currency-denominated public debt, either directly or under the guarantee of the Ministry of Finance, amount to approximately €121 million.

What we need to know about these reserves

• Romania’s international reserves play a key role in mitigating increased volatility in the foreign exchange market, price stability and financial stability objectives.

• Their adequate volume increases confidence in the government’s ability to manage crisis situations and, taking into account the quality of the economic policy, contributes to the reduction of costs associated with the state’s foreign loans.

• Developing countries with access to capital markets at a reasonable price, as in the case of Romania, usually use foreign exchange reserves – part of international reserves – as a precautionary measure to deal with the risks associated with a possible deterioration of the current account balance.

• In an economy with a floating exchange rate, one factor that plays an important role in determining the optimal level of foreign exchange reserves is the volatility of the local currency, especially during times of instability in financial markets.

• The NBR aims to ensure their appropriate level in order to collectively achieve a number of objectives. Liquidity and security are pursued in the first place, and profit in the second place, the management of international reserves of the BNR is carried out in conditions of reduced propensity to risk.

• Thus, the maximization of the value of international reserves occurs under the conditions of compliance with prudent risk limits, which ensure their constant availability for use in case of need.