Skopje, 6 April 2023

“The stability of the exchange rate of the denar during the last crisis proved to be an anchor of stability in the domestic economy. The strategy of a fixed exchange rate prevented greater inflationary pressures, contributing also to maintain financial stability, given the relatively high euroization in the banking system’s credit portfolio." These were some of the messages the Governor of the National Bank, Anita Angelovska Bezhoska conveyed at the Governors’ Roundtable, within the Regional Governors’ Meeting is taking place in Opatija, Croatia.

The Governor’s Roundtable: Caught in a Whirlwind: Monetary Policies and Small Open Economies in the Face of Great Inflation 2.0“, apart from the Governor of the NBRNM, was also attended by Boris Vujcic, Governor of the Croatian National Bank, Bostjan Vasle, Governor of the Central Bank of Slovenia, Senad Softic, Governor of the Central Bank of Bosnia and Herzegovina, Radoje Zugic, Governor of the Central Bank of Montenegro, as well as the university professor Sasha Drezgic, Dean of the Faculty of Economics in Rijeka. Based on their experiences, the governors discussed the monetary policies in the conditions of inflationary growth, as well as the possibilities of the central banks of the smaller open economies for taking actions in the conditions of global inflationary shocks. After the presentations at the panel discussion, the governors also answered questions from the students who attended the event.

In the context of maintaining the fixed exchange rate of the denar, and thus the macroeconomic and financial stability in the country, the Governor Angelovska Bezhoska pointed to the appropriate level of foreign reserves, which according to the latest data amount to Euro 4.2 billion. This is a historically high level and is a key indicator of the capacity for successfully implementation of the monetary strategy. She also emphasized that since the beginning of the energy crisis, due to high import pressures, in order to maintain stability, the National Bank intervened in the foreign exchange market, thus enbling to meet the higher demand for foreign exchange liquidity. Since last July, the foreign exchange market significantly stabilized, and the National Bank intervened with the purchase of foreign currency, which, together with external financing, provided additional support to the foreign reserves.

This year the trade deficit is expected to reduce, given gradual stabilization of stock prices (especially energy prices), which will contribute to lower pressures on imports, as well as given more favorable context for part of the export sector. This, together with additional flows through the financial account, would further build-up the foreign reserves as a basis for maintaining exchange rate stability.