Briefing Romania

The EUR/RON once again tested the 4.7700 level, which remains a strong resistance these days. Shifting higher remains a matter of time in our view but for now 4.7700 should hold.

Today will be a good occasion to see if the recent sell-off in Romanian government bonds has driven yields to attractive enough levels. The Ministry of Finance auctions RON500 million in June-2024, a tenor usually in demand from local players. Should MinFin want to pay up towards the 4.10% area, we believe it could upsize the target amount around these levels. On Friday, the ROMGB yield curve was little changed after the previous day's sell-off.

Cash is becoming slightly more expensive these days and we should see diminished interest for the central bank’s deposit taking auction today, despite relatively favourable settlement dates. A prudent stance from local banks could lead to carry inching towards the deposit facility in the last days of the reserve period.