The main component, represented by foreign exchange reserves, in turn hit a new all-time high, placing for the first time above the level of EUR43.2 billion (adding the SDR holdings, the foreign exchange reserves amount to EUR46.6 billion). Financial flows related to inflows of European funds and foreign investments contributed significantly to this favorable evolution, according to Badea.
International reserves are particularly important within the general economic system and play a significant role in strengthening the confidence of foreign investors in the financial stability of the country and its ability to repay the foreign debt.
It is well known that they represent a relevant factor for meeting a country’s international financial obligations (debt payments), financing imports, and mitigating sudden capital movements. Therefore, their level and adequacy also contribute to reducing the potential volatility of local financial markets during periods of international turbulence, in case of exogenous shocks or adverse events, Badea also said.