Briefing Romania

Range trading again for the EUR/RON, with some selling interest in the first part of the day pushing the pair towards 4.7600. Without major pressure on either side though, we closed around 4.7630. Today’s calendar looks light, hence we look for another day of sideways trading for the EUR/RON around yesterday’s close.

The Romanian government bond market was pretty calm yesterday, with little interest across the curve. Several official statements regarding possible changes to the bank tax – apparently positive ones for the banking sector- haven’t stirred much interest, as such developments are likely already priced in to a large extent. The Ministry of Finance should release its March auction calendar shortly.

Somewhat earlier than expected, cash rates started to inch lower yesterday, with overnight implied yields closing the day around 4.00%. The move partially translated into longer tenors as well, with 1M now at 4.30%. We expect the downside move to continue at a softer pace in the coming days as the 3.50% Lombard level could act as a reference for some time.