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Lithuanian Jan reserves down, net forex sales halve

VILNIUS: Lithuania's total foreign reserves fell five percent in January after a precipitous nine percent drop the month before, but net sales of foreign currency to commercial banks halved, the central bank said on Monday.

Total international reserves fell $61.9 million to $1.18 billion in January while foreign exchange reserves, excluding gold and SDRs, dropped to $1.13 billion from $1.19 billion the month before, central Bank of Lithuania data showed.

Bank of Lithuania Deputy Governor Arvydas Kregzde said in a statement the decline was largely due to a seasonal increase in foreign currency demand from banks. Reserves have fallen in January every year for at least the past four years.

In January, the central bank sold $46.8 million worth of currencies more than it purchased from commercial banks. Net forex sales in December were $88.7 million. November net forex sales came to $49.8 million.

Forex sales data are a measure of dollar demand -- and therefore litas confidence -- as most banks buy forex currency from the central bank due to the litas four-to-one dollar peg.

"(The drop) was also impacted by the government's operations with convertible currencies within the Bank of Lithuania, the dollar's appreciation...the decrease of prices on foreign securities and redemption of some IMF loans," Kregzde said.

He added that the drop was mitigated slightly by rising commercial bank obligatory reserves and central bank revenues from foreign currency investment operations.

At the end of January, commercial banks' obligatory foreign reserves stood at $109.7 million versus $108.9 million at the end of December while International Monetary Fund (IMF) loans eased to $88.2 million from $90 million while central government forex holdings inched down to $60.2 million from $61.4 million.-Reuters