Transnistria devalues currency further as Russia delays support

Transnistria devalues currency further as Russia delays support
By Iulian Ernst in Bucharest November 14, 2017

The central bank governor of the Moldovan separatist republic of Transniastria has sought to reassure citizens after the monetary authority devalued the Transnistrian ruble from 15 to the US dollar to 15.5 to the US dollar in early November. 

Vladislav Tidva ruled out a further devaluation of the local currency before the end of this year, and pointed out that the Transnistrian ruble remains within the 15.0-15.5 corridor set in June. Still, the economy is under pressure as the government has so far failed to secure financial support from Russia, which has historically backed Transnistria both politically and economically. 

As of today, there are no factors that could cause a sharp devaluation of the Transnistrian ruble, Tidva stressed on November 13 during a meeting of top government and parliament officials. 

The central bank’s deputy governor Alexei Melnic explained, quoted by, that the central bank devalued the ruble because of seasonally stronger demand for foreign currency toward the end of the year. During this period the amount of currency coming from exporters (which have to sell part of their hard currency revenues to the monetary authority) is usually reduced, he explained.

Transnistria previously devalued its currency by 25% in June, after Moldova significantly reduced power purchases from the separatist republic. Previously this had been a significant source of foreign currency for Transnistria. 

The region's economy has undergone severe recession amid political turmoil in recent years. Russia reduced its financial support as well, in response to scandals related to the siphoning off of some of the funds provided by Moscow, while declining to support the radical separatist rhetoric of Transnistrian leaders who called for unification with Russia. 

Former president Evgheni Shevchuk fled the country after he lost the elections last December and was accused of having siphoned off most of the Russian financial support provided during his term. “It is understood that Russian officials know that former president Shevchuk left Transnistria with at least €130mn,” political analyst Oazu Nantoi told

Current President Vadim Krasnoselski has not managed to get Russia’s financial support, reported quoting Nantoi. Krasnoselski has repeatedly mentioned requests for $40mn financial support from Russia, but no result has been reported yet. Instead, Russia expects Sheriff business conglomerate (the de facto owner of Transnistria’s economy and the backer of the current government) to contribute financially to the republic’s budget, before it resumes the traditional financial support that has been disrupted over the past years amid political turmoil, Nantoi explained. 

Shevchuk himself asked Sheriff last year, in an attempt to get budget financing, to “donate” £250mn to the state in the account of the $1bn fiscal allowances received in the past.

Furthermore, Krasnoselski — the candidate backed by Sheriff’s political arm Obnovlenie ahead of last year’s presidential election —has lost public support after winning a trenchant victory against Shevchuk last December. Protests took place on November 10 in Tiraspol, Transnistria’s capital city, against Krasnoselski. Shevchuk, currently in hiding abroad, saluted the street protests organised by the opposition Communist Party.

Under these circumstances, Tidva’s statements seem to be mere rhetoric aimed at avoiding a collapse of the currency on the free market, while the authorities still hope for the repeatedly delayed financial support from Russia. The dollar is currently being sold against 16.35 Transnistrian rubles at local exchange offices, while according to the central bank consumer prices increased by 9.8% in January-October.