Consumer demand for currency in June tops last year's figure

Consumer demand for hard currency in June 2004 was 1.4 times greater than in June 2003, while the supply dropped by 3%, the Central Bank's web site reported.

The Central Bank gave the beginning of the holiday season and, as a result, an increase in tourist trips abroad as the reason for the current situation.

The net demand is the difference between the amount of cash foreign currency sold to natural persons and withdrawn from their accounts and the amount of cash foreign currency bought by authorized banks from natural persons and placed in their accounts.

According to the Central Bank's data, in June 2004 the consumer's net demand for cash foreign currency (the difference between the amounts of hard currency sold to natural persons and withdrawn from their accounts and the hard currency purchased from them by banks and placed in their accounts) increased by 57% against May and stood at $1.7 billion. This is the biggest figure since September 1998. The increase in the net demand in June is connected exclusively with the operations of natural persons (residents) whose net demand increased fivefold and reached $1 billion. The Central Bank says that a trend toward a growth in the consumer's net demand for cash foreign currency has a stable seasonal character and has been registered since 1996. Apart from that, the net demand for cash foreign currency, mostly for dollars, increased because of the influence of certain "nervousness" in society due to the arisen situation in the banking sector, the report said.

The net demand by non-residents, in comparison with May, decreased by 21% to $0.7 billion.

Explaining the situation, the web site said that to satisfy the increased consumer demand in June 2004, authorized banks increased, in comparison with May, the amount of cash foreign currency brought in by 53% to $1.7 billion. The share of dollars in the total amount of this currency dropped to 87%, against 89% in May. The taking out of cash foreign currency went up by 15% to $0.14 billion. The Central Bank noted that despite the increased taking out of euros, mainly dollars were taken out of the country.

"Thus, June 2004 saw growth in practically all operations connected with the cash foreign currency incomings and expenditure," the Central Bank said. The only exception was the sale of hard currency in exchange centers and the withdrawal by natural persons (non-residents) of the money from their hard currency accounts in authorized banks. The remainders of cash foreign currency in the cash offices of authorized banks decreased by 3% and totaled $1.4 billion at the end of the month.