Briefing Romania

Despite its regional peers appreciating, the Romanian leu remains strained around 4.7600 against the euro for most of the day, inching slightly lower towards the end of the trading session. This remains a buy-on-dips story in our view. The premier-designate should announce the cabinet lineup today.

It was an even quieter day for Romanian government bonds. Things should get more interesting today though when the Ministry of Finance auctions RON 500 million in February 2029 bonds. As usual lately, the domestic story isn’t helping, but the yield-depressed external context might again save the day as investors should still be tempted by relatively high-yielding government bonds. Nevertheless, we expect somewhat cautious bids towards the higher end of the secondary market levels.

As expected, the beginning of the new reserve period say cash rates rebounding higher towards the 3.00% area. With the central bank's deposit maturing only next Monday, we could see some more upside pressure on funding rates for at least a couple of days.