High volumes or low volumes like yesterday do not seem to matter these days for the EUR/RON market as the pair remains stable within a tight 50 pips range. With no major data out today, we expect the same 4,6600-4,6700 range to hold.
Strong auction again for the MinFin which upsized the allocation from RON 500 million to RON690 million with an impressive total bid-to-cover of 2.1x. Yield-wise it came out slightly below our expectations at 4.82% average and 4.84% maximum, with the average of rejected bids quite close to the cut-off, at 4.85%.
As expected the NBR did not organise a repo auction yesterday as the liquidity for the current reserve period looked sufficient. Implied yields for the first days of the next reserve period are trading quite above the Lombard rate of 3.50% while the 1Y rate surpassed again the 4.00% mark. Hence, some tricky few days could follow, with quarterly payments to the state budget due on 25th, until next Monday when we believe the NBR will decide to inject liquidity.