Interview with the president of the ACI Macedonia in the magazine Business and Economy

This year daily traffic on the foreign currency exchange market in the Republic of Macedonia is moving between 30 and 45 million Euros.

Bojan Cvetanovski

President of the Executive Board of the ACI Macedonia – The financial market association


Q: You are the president of the ACI Macedonia – The financial market association. At the beginning tell us something about association, its type, previous history, about its members, international status…

Cvetanovski: ACI Macedonia – The financial market association is established on 23th of April, 1996 year, named as Macedonian Forex Club, initiated from the National Bank of the Republic of Macedonia. In 2001 Association became part of the international association ACI – Financial Market Association with it’s headquarter in Paris and with members of 63 countries. Than the name was respectively adapted in ACI Macedonia – The financial market association that represent an international standard. Members of this association are all commercial banks from the Republic of Macedonia and National Bank of the Republic of Macedonia. Association is a non – profit organization that operates in accordance with its Status and adequate subsidiaries. Association is structured from: Executive Board, Supervisory Board and Assembly. Once in a year the Organization organized cheerful annual assembly where among the participants are all domestic banks, domestic and foreign experts, quests from foreign banks and representatives of the financial software.

Q: What is Association main purpose and whose are their regular activities?

Cvetanovski: Association is established with purpose to spread the knowledge and to exchange experience between foreign trade market dealers from this state and from the foreign states, as well for promote the profession, or said it in slang as ‘’dealing and client education’’. Dealing is a complex profession; financial markets are part from University education and there is imposing literature and exams as additional education, but the most important is practical experience because this profession is exclusively dynamic category with a lot variables and specific daily events that correlated between them and that are profoundly followed and described by the professional literature and usually made it with delays. For one foreign currency trade dealer to receive on quality is required minimum 5 to 6 years of experience in active trading in the domestic and in international foreign currency exchange market. Our purpose is to make this path easier and to provide support with knowledge sharing, behavior codex, explanation of the financial innovations. Additionally here are the clients that we bring closer to us and that we should explain all opportunities of certain type of financial instruments. With that purpose, ACI organize seminars, workshops, panel – discussions and daily communications with the institutions and among participants which are from consultative nature. For all this activities we have great support from National Bank of the Republic of Macedonia. Till the end of 2018 we didn’t expect significant movements on the market constellation. This year demand and offer side for foreign currencies on the foreign exchange market is almost completely in balance, even in some moments foreign currencies demand is higher. As result of such activities NBRM in trading with commercial banks has realized net – redemption of 198, 4 million Euros.

Q: What is your assessment for the movements on the international foreign currency market? How this impact on the market of the global trade war, which from day to day receives more and more on intensity?

Cvetanovski: FED in June 2013 has announced process called “tapering” that means gradually revocation on the program of unconventional monetary stimulus and than adequate pulling on the part of the monetary mass (liquidity) that circulated in the time of crisis. That means that the USA economy is stabilized and ready for new economic expansion. Later (December 2015) FED begins with increasing the interest rate. In that period European Central Bank yet begins the strongest phase of injecting fresh liquidity in the systems with the monthly purchasing of securities in amount of 60 billion Euros. Differences in cycles between FED and ECB gives a logical conclusion that the American dollar in the following years is going to be favorite among currencies pairs and that dollar value particularly in relation with the euro is going to rise. In the previous several years dollar position was a winning combination.

In the actual international situation of trade wars as well political and war tensions on the international plan, again the American dollar and Switzerland franc will be leading currencies because the both are considered as ‘’safe – haven currencies’’. Especially in any uncertainty on the international level, investors’ part of its assets is converting in to these currencies. Value of the Switzerland franc particularly rose in the last 10 years and achieved unregistered values in relation with the American dollar until then. In relation with the euro as a result of the economical crisis in 2008 and all consequences and political turmoil in European Union and other part in the world Switzerland franc reaches its pick.

Q: What can we expect till the end of the year in the perspective of movement of the key world currencies?

Cvetanovski: American economy is in its full swing, unemployment rate is around 4 %, which is below the natural rate of unemployment. Inflation is in slow growth, (that was wanted by FED) and currently is moving around 2, 4 % on the annual level. These numbers guaranteed that FED is going to continue with the policy of increasing the interest rates and in 2019 they will achieve at least 3 to 3, 25 % on the annual level. This is good news for the American dollar. But, till the end of the year the focus is directed toward ECB, which announced that until the end of 2018 is going to abort the program of non conventional monetary stimulus (currently 30 billion euro purchasing of securities on the monthly level) and that in the second half in 2019 is going to start with mildly increasing of the interest rates. Market perception is supporting the development of this events and this is eventually positive news for euro currency. If still delaying of such schedule of events continued, then the value of the American currency could came to the levels that are recently unseen in the relation with the euro.

Q: Let’s talk about the domestic foreign currency exchange market. What are the key factors that move this market, and what is its sensitivity? Are there any cycle movements that repeat in particular periods of the year?

Cvetanovski: Domestic foreign exchange currency market operates on a basis of almost fixed euro course. Free range of movement on the EUR/MKD is between 61, 47 and 61, 72. This is an established course on which banks could purchase and sell Euros from the National Bank of the Republic of Macedonia. In such frame banks are trading among them on the basis of markets professionally defined principals. Adequate middle course of the euro is formed in accordance with the listing of the bank supporters and they are publishing it on a daily level on the electronic platform for interbank’s trading. The rest values of the currency list on NBRM fluctuate freely in relation of the Macedonia denar and its value depends from movement on the international foreign exchange market. In general the set of factors that influenced foreign exchange market movements are complex. Participants are the companies from the real sector, investment funds, licensed exchange offices, foreign banks and private subjects. All of them are trading with the domestic commercial banks and finally are creating demand and offer of foreign currencies and have impact over banks foreign exchange market positions. Domestic commercial banks are trading among themselves through unified electronic platform, therefore on the efficient and market principal they are harmonizing lack and surplus of foreign currencies. It means that if one side of the market (demand or offer) begins to dominate, course of the EUR/MKD begins to move toward up or toward down, in the volume of the determined extent imposed by NBRM. Foreign currency market is also determined by the seasonal factors (in the summer period – higher offer of foreign currencies, lower demand) and there are particular period of the year when the market constellation is repeated but with different intensity.

Q: How big is the average daily turnover on the foreign exchange market in this country and who are the largest market ‘’players’’? What is expected to happen on this market due to the beginning of 2019?

Cvetanovski: Daily turnover on the foreign exchange market is moving among 30 and 45 million Euros. There are days with higher or lower traffic, but in general the volume of this year is as stated above. Largest 6 commercial banks in the country are among the supporters of foreign exchange currency market. Among them and with NRBM they are trading through strict professional criteria, with lower margins on buying/selling side. In every moment they must buy or sell particular minimal strictly defined amount of foreign currencies as requirement of some other bank supporter and they do that without any previous announcement. As I mention previously this process and way of trading is being performed through electronic way, transparently, with compulsory listing of the courses for both sides on the market (buying/selling). This represent international standard. The other great players on the foreign exchange currency market are large companies’ importer and exporter from the real sector. Till the end of the 2018 I do not expect significant movements at the market constellation. This year, until now, offer and demand for foreign currencies is higher. This results NBRM in trading with the commercial banks to realize net – purchasing of 198, 4 million of Euros. Course of trading of EUR/MKD is stable and during the whole year is gravitating around level of 61,47, value in the lower part of the defined volume, which performs intensity on the Macedonian denar in relation with the euro. Interest margin is supporting Macedonian denar in relation with the euro because the euro is still in negative interest rate that domestic commercial banks are purchasing on their euro assets in the foreign banks.

Q: How much and how the Association ACI Macedonia helps for better functioning on the domestic foreign trade currency market?

Cvetanovski: ACI Macedonia is active association not only on the foreign currency market but also in all segments of the national financial markets. Near the end is the adoption of the Rule Book, devoted to the process of assessing the interest rate – SKIBOR, which formulation and concept is to give particular referential on the domestic money market. For that reason it should include more market elements. In the process of forming is a Board who is going to for follows and elect the referent banks where ACI Macedonia will have its own representative. Representative is going to be in charge and will control the reliability of SKIBOR – listing and activities of the referent banks.

Precisely, always actual topics from the foreign currency market are the instruments of hedging and financial derivatives. As products they exist more than 10 years on the domestic market and are adequately defined with legislation regulative. The turnover in that segment is very small in relation with the total amount of the foreign currency market. Purpose of the financial derivatives is to provide company protection (exporter or importer) from the fluctuation of the value of the currencies on international foreign currency markets. This is very efficient aspect for none euro currencies from course list of NBRM. Association works on its affirmation and customer care, and has plan to promote and give support of know –how to the banks. It also gives opportunities for new products on this theme called as non – deliverable forwards (NDF) product that is going to simplify the process of signing of this type of transaction to companies. This is particularly interesting in the cases when it is longer than 30 days in the part of managing liquidity. The other field with space for development is the part of using electronic platforms for trading on the foreign currency market devoted for clients and private subjects. Platforms are very useful tools in the process of trading, because clients could follow the course movement in real time from the screen of its computer and can make any transaction in a chosen time with just one click. It means that all suggestions for improving of the function of the domestic financial markets we are developing and analyze with the NBRM, whereas we receive significant support and participation in all point of operations.


Q: In which quantity the foreign currency on some country is the mirror of ‘’health ‘’ of its economy or this was just the case from the past?

Cvetanovski: Basic characteristic of the movement of the foreign currency market is that they are the anticipative movements. It means that the actual course of one currency pair has implanted in itself forward expectations for developing of the events on the economical, political and safety plan. What are those expectations and which time horizon is job of the assessment on the foreign currency traders and their strategic teams from fundamental and technical aspect. Adequately, foreign currency market takes another level on the perception that it creates for itself.

Q: One of the most actual topics in the world of the traders on the financial market is appearance of the crypto – currencies. What is your general assessment for them?

Cvetanovski: Crypto – currencies aren’t something new, already 10 years they are exiting on the market, but the bit coin last year attract attention with rapid increase of its value and at the same time it puts in the focus all the remaining items. In that ‘’revealing one new world’’ there was created one perception for kinds of financial innovation in positive sense of the word without noticing its negative sides and objective limits on block chain technology on which basis most crypto currencies are based. First limit is enormous expenditures of electricity in the process of block transactions confirmation or so called procedure ‘’ proof of work’’. It is predicted that this year in the process of confirming of bit coin transactions there are going to be spend half percent from the world supply of electricity and all that for turnover that is not connected with real economy. Expansion on block chain principal in wide usage probably will lead to the electricity crisis.

The second limit is security. Hackers’ attack of the crypto – wallets is almost praxis, but there is also one more aspect. Block chain concept is based on mutual consensus of so called ‘’ miners’’, that the particular block of transaction are signed. ‘’ Miners’’ are one kind of accountant on the particular crypto – currencies distributed through the entire world and they operates as groups in so called pulls, whereas none group couldn’t have dominant processor power in terms of influencing the process of confirmation. If particular group of ‘’miners’’ achieve processor power of more than 51 %, de facto it makes privatization of the crypto – currency and could have opportunities of falsification in its own interest.  That means the end for such currency and lost for all other investors because the crypto – currency aren’t guaranteed by any state authorities, national economy or body of power. This process is not simple for accomplishing and the consequences will be catastrophic, particularly for small investors. Crypto – currencies and entire block chain technology are still in the phase of high risk experiment, its marks on the currencies markets are ‘’X’’ in advance, that means their treatment is not like those on the currencies, but as one of the goods (commodities).

Q: Price of some crypto – currencies has large ups and downs. Uncertainty for future price movements is totally uncertain. Still what do you expect?

Cvetanovski: From the beginning of this year national authorities in the USA, in China and others in the euro zone involved particular restrictions toward using of the crypto – currencies, but big banks (City Group, JP Morgan, Bank of America, etc.) also introduced some restrictions. This caused price fall, particularly of the price on bit coin, from range of 20 thousand American dollars to almost 7 thousand American dollars per one bit coin. None national economy stands behind crypto – currencies, there are no economical fundaments, almost all transaction are speculation and are used as channel for movement of the financial resources made from illegal activities. Companies that accepted crypto –currencies as payment instrument are doing that in promotional purposes and every transaction in crypto – currency are immediately converting in domicile currency. Adequate falls and increasing over prices in quick cycles are possible, but for now, on this level in basic crypto – currencies couldn’t attract serious investors.

Q: What are the future plans of ACI Macedonia?

Cvetanovski: In the middle of this year we received offer from ACI FMA to become part of the International Board education. This happens for the first time in the history for our Association and it present great honor and responsibility. In basic ACI – FMA is in the process of revision of the educative materials and its unification and by that we are invited to participate in this process of knowledge and perception. In the structure of our Association we posses Commission for education that is actively involved in that process. Nowadays we signed Memorandum for collaboration with the Macedonian Bank association for activities that will contributes for developing of the financial markets in the Republic of Macedonia, as well and organization of presentations, events, trainings and seminars from common interest. We are very often in contact with ACI Slovenia, ACI Serbia, ACI Croatia and ACI Bulgaria in the direction of coming together of international collaboration, education and practice exchange.

Zoran Jovanovski




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