The EUR/RON traded quietly just below 4.7600 on low turnover. We expect a test lower today as exporters might sell hard currency to cover quarterly payments to the state budget.
Romanian government bonds saw better bids yesterday, especially at the front-end, as local players were looking to roll over the April 29 bond redemption. The Ministry of Finance upsized its Oct-2021 auction from RON500 million to RON695 million on robust and clustered demand with a bid-to-cover ratio at 1.8x and average/cut-off yields at 3.80%/3.83%.
Implied funding rates edged a bit lower to 3.30% yesterday as we near the end of the reserve maintenance period. With the prospect of large payments to the state budget ahead of a RON8.8 billion bond redemption, short-term implied yields should see upward pressure into the new reserve maintenance period starting tomorrow.