Page 14 - Ekonomija i Biznis_May 2016.indd

Perspective
Zoran Jovanovski
Refrigerator
The text for this section for the
May edition was ready, written, time. The stabilization was tedious and it
on another topic. However, the
evening on April 25, immedi-
ately before this edition was
printed, I got a strange phone call. It was
a female voice, who said that she was a
distant relative, which is not impossible in
the extensive family of my parents, how-
ever that we lost mutual contacts. She
asked me what to do as a family, with the
termed denar deposit they have in a bank?
Whether they should keep it until Novem-
ber or whether they should terminate it
and buy foreign currency withthe denars?
It was perfectly clear to me where things
have gotten.
I remember the story that a friend of
mine from Israel told me once, describing
what the people did in that country in con-
ditions of very high, galloping inflation,
when prices constantly increased. They
bought large refrigerators! So at the begin-
ning of the month, when they received sal-
ary, they were able to buy food, store it in
the refrigerator and at least preserve some
of its value which was quickly being lost
when the prices increase!
In my lifetime so far I have witnessed
several situations of serious turbulence
in price movements, and accordingly, of
the foreign exchange rate of the domestic
currency. Some were real and some were
speculative turbulences. The period of Yu-
goslavia’s disintegration is an example of
real turbulence, when money quickly lost
the purchase power on the market, both
in shops and in the foreign exchange mar-
14 May 2016
ket compared to the Deutsche mark at the
lasted long. What must never be under-
estimated is the eternal memory of this
situation. Everyone who survived this ex-
perience, will remember it for the rest of
his/her life. Because throughout the years,
the German Central Bank became a world
example of a fierce unwavering fighter for
the price stability and the Deutsche mark
at the time. Because Germany has a collec-
tive memory about specific moments from
the first half of the past century, when
the prices of meals at the end of the lunch
were higher than the price at the moment
the meal was ordered.
At this moment there is no rational eco-
nomic basis for any real turbulence in re-
gard to the stability of the prices and the
exchange rate of denar against Euro. In
2014 an average annual fall of the general
price level of 0.3% was registered in the
Republic of Macedonia. Such an identical
fall of 0.3% happened in 2015 as well. Such
a condition continued in the first three
months of 2016, whereby the fall is 0.1%.
Shortly, not only that the inflation is not
high, rather it is negative. The case of the
denar exchange rate is even more illustra-
tive. In regard to the relation Deutsche
mark / Euro, it was changed for the last
time on July 9, 1997.
This is the part of the story where the
expectations of each economic entity in
this country are explained. So far the ex-
pectations for the prices and the exchange
rate rested on the economic foundations
and they were kept at low and stable levels.