EUR/RON
With seemingly pretty strong support at 4.7600 and a line in the sand at 4.7700, the EUR/RON looks confined in a tight range for a while. Yesterday it traded within an even narrower 30 pips range, closing around 4.7620.
Government bonds
Another strong primary auction marked an otherwise uninteresting trading session. The Ministry of Finance allocated RON750 million versus RON500 million planned, at 3.83% average and 3.84% maximum yields, broadly in line with our expectations. The total RON1.16 billion demand has been clustered within some 5 basis points suggesting real interest for this paper. The market subsequently shifted 1-2 basis points lower following the auction result.
Money market
Today, it’s arguably game over for the ultra-low cash rates as we expect the central bank to step in on Monday and drain some of the surplus liquidity. The forward curved corrected a bit in anticipation of the higher funding, with the 1M implied yields (which captures most of the next reserve period) trading around 3.30%.
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