Snaps
12 July 2019

Briefing Romania

Moody's review tonight. We do not expect any action

Romania_in_Europe.jpg

 - Source: Reuters
Source: Reuters

EUR/RON

The EUR/RON tested higher yesterday on decent turnover for a summer day, but the pair failed to break above 4.7400. As bond inflows resumed for the 12-year auction, selling interest emerged later in the day pushing the currency pair near 4.7340. Range for today: 4.7300-4.7400.

Government bonds

The ROMGB yield curve shifted lower yesterday while steepening a bit, as most of the buying interest was in the belly segment which pushed yields down c.6 basis points. The 10-year yield decreased c.3bp to 4.56% mid. The Ministry of Finance sold RON400 million, as planned, in 12Y bonds at an average/maximum yield of 4.85%/4.87% with a bid-to-cover ratio at 2.1x. Moody’s review due tonight is somewhat weighing on sentiment, but we do not expect any action from the rating agency.

Money market

Funding rates dropped c.60bp yesterday, closing just above the NBR deposit facility of 1.50%, as liquidity is likely to stay in excess until the end of the current reserve maintenance period. The NBR is expected to organise a fixed rate deposit taking auction on Monday with full allotment.

 - Source: Reuters, ING estimates
Source: Reuters, ING estimates