Briefing Romania

The EUR/RON moved lower, testing 4.7200 and closing around this level, on large turnover, though lower than the previous couple of days. The 4.7200 level should act as support, providing there is no significant surprise from the European Central Bank today. Hence, we see a 4.7200-4.7300 range for today.

The ROMGB yield curve was little changed yesterday with the 10Y yield closing flat at around 4.70% mid. Today, the Ministry of Finance auctions RON500 million in 3Y bonds which should bring good demand due to an upcoming large redemption and overall ample liquidity conditions. MinFin could increase the size and we could see a cut-off yield around the secondary market mid-level of 3.95%.

The implied cash rate stood above the NBR key rate of 2.50% yesterday. Bloomberg cited sources from the central bank saying the NBR is considering broadening the range of tools for mopping up liquidity to one or two months deposits, but also considering overnight deposit taking operations.