Briefing Romania

The EUR/RON inched lower in the first part of the day yesterday testing 4.7500 on above average turnover and divergent from regional peer currency pairs. This suggest a commercial flow behind the move, as later in the day EUR/RON caught up with peers and closed just below 4.7600. We expect the same range for today, 4.7500-4.7600, with a downside bias as exporters are likely to sell hard currency to get RON for payments to the state budget, while carry is likely to remain quite high.

ROMGBs yield curve steepened yesterday after the 10Y bond auction came in at the higher end of expectations. MinFin sold RON600m Feb-2029 bonds versus RON500m planned at an average/cut-off yield of 4.17%/4.19%. Bid-to-target was 1.46x. Overall, quite a good result given the global and domestic uncertain backdrop.

The cash rate inched more than 50 basis points higher to just above NBR credit facility rate of 3.50% yesterday. Upside pressure is likely to persist today with large quarterly payments to the state budget due.