Briefing Romania

The EUR/RON inched higher yesterday, on below average turnover, closing near 4.7500. With major stock indexes in negative territory, it is likely that the RON continues to weaken. Range for today: 4.7500-4.7550.

The Romanian government bond yield curve shifted higher and steepened a bit, as the front-end is still supported by surplus liquidity in the banking system. 10Y yields closed around 4 basis points higher at 4.10% mid. ROMGBs have decoupled lately from core and regional sovereign debt markets likely due to idiosyncratic issues such as the upcoming no confidence vote tomorrow. The 10-year ROMGB spread over Polish government bonds is just c.10 basis points below the 2019 highs seen at the start of the year when the government issued a controversial emergency decree, which has since been significantly watered down.

The cash rate continues to trade just below the NBR's key rate of 2.50% after Monday's NBR deposit liquidity sterilisation auction.