The Croatian National Bank, led by Governor Željko Rohatinski, has once again lowered the minimum foreign currency claims rate from 25% to 20%, thereby freeing up 1.25 billion euros for banks.
In addition, the HNB continued direct interventions in the foreign exchange market, selling 185 million euros to banks at an exchange rate of 7.44 kuna per euro. This has allowed the HNB to influence the exchange rate and ensure sufficient liquidity in the financial system, but Rohatinski warned that this cannot be the primary, let alone the only instrument for maintaining exchange rate stability, and that he expects the policy to contribute. Foreign currency reserves in banks at the end of January amounted to 7.6 billion euros and, according to Rohatinski, they should be put to use for stabilizing the financial system. Today, a repo auction was held where banks were granted exactly half of the requested 8.5 billion kuna.
The governor sharply criticized banks that conditioned the loan to the state on four major changes in the HNB’s policy.
The release of foreign currency reserves and the restrictive policy of kuna liquidity, on the other hand, generally lead to higher interest rates in the money market, but Rohatinski emphasizes that the much greater protection for creditors is preventing the depreciation of the kuna rather than stopping the rise in interest rates. During today’s address to the public, Rohatinski was very critical of commercial banks, revealing that they, according to him, created a precedent by attempting to condition the approval of a new loan of 750 million euros with four major changes in the HNB’s policy during negotiations with the Ministry of Finance. The banks demanded the removal of lending limits, a reduction of kuna reserves from 75% to 50%, a joint exchange rate policy, and that the interest rate on the money market does not exceed 10%, while Rohatinski, who was evidently supported by the Government, rejected all demands. (Matilda Bačelić, photo: Dražen Lapić)
