Snaps
25 January 2019

Briefing Romania

No respite for EUR/RON

RomaniaBriefing.jpg

 - Source: Reuters
Source: Reuters

EUR/RON

The EUR/RON continued to edge higher yesterday on above average turnover despite a domestic bank holiday. The large turnover on Wednesday suggests that the upside move in EUR/RON is well supported. We expect a similar scenario for today with a possible range of 4.7600-4.7800.

Government bonds

Romanian government bonds shifted higher in a bear flattening move on Wednesday, with front-end yields rising by c.5-7 basis points driven by liquidity conditions, while the long-end closed a couple of basis points higher as well.

Money Market

The O/N implied yield spiked by almost 5 percentage points to above 7.00% on the back on large quarterly payments to the state budget, pushing the entire front-end of the money market curve higher and leading to an inversion. Upside pressure in EUR/RON is likely to support good paying interest in the front-end forwards.

 - Source: Reuters, ING estimates
Source: Reuters, ING estimates

 - Source: Reuters, Bloomberg, ING
Source: Reuters, Bloomberg, ING