BriefING Romania

Some paying interest for the EUR/RON emerged in the second part of the trading session and pushed the pair back to 4.6700 yesterday as risk aversion seems to be returning. We still think that the 4.6700 is the central bank’s line in the sand, for now, hence we expect the pair to be steady around current levels.

Another successful auction for the Ministry of Finance as it allocated RON888 million versus the RON500 million initial target at the October 2021 auction. Total demand was also impressive at 2.91x bid-to-cover while average and maximum yields came out in line with our expectations and secondary market pricing at 4.50/4.51%. Otherwise, the ROMGBs yield curve was little changed yesterday.

On the money market, the overnight implied yields dropped another 20-30 basis points towards 1.75%, just above the 1.50% deposit facility. With things laid out pretty clear for the current reserve period, the main focus will now be on the central bank's decision on whether to organise a repo next Monday.