Briefing Romania

Range trading and below average turnover for the EUR/RON seems to be the norm these days. The pair traded again within a narrow 40 pips, closing around 4.7570. With no market moving data on today’s calendar, we expect the same 4.7500-4.7600 trading range to hold.

The RON400 million 1Y T-bills auction came in much stronger than expected. The Ministry of Finance allocated the planned amount at 3.01% average and 3.09% maximum yields, which is kind of a long tail but again yields printed below expectations. The bid-to-cover ratio was also strong at 1.83x. Otherwise, the secondary market was orderly with a downside bias, yields closing 4-5 basis points lower across the curve.

The current reserve maintenance period ends today with cash rates at the deposit facility. The bulk of the monthly budget payments is due on 25 March and the market seems to be pricing strained liquidity conditions for a longer period as all tenors longer than overnight trade above the Lombard rate.