Briefing Romania

EUR/RON

As expected, the market remains quiet ahead of a vote by Parliament today on a new central bank Board and key rate decision tomorrow. The EUR/RON has remained stable in a tight 4.7320-4.7350 range. We expect a similar pattern today.

Government bonds

After an initial upward move, Romanian government bonds corrected and closed the day with a mini-rally, though we are still far from recovering the approximately 20 basis points lost last week alone. Markets seem to have interpreted the ECB nomination as a predominantly dovish signal which, in the short term, could re-ignite buying interest for local papers.

Money market

Cash continues to trade around the 2.50% key rate. Liquidity seems quite ample and we could see the FX swap implied yields trading more towards 2.00% as offshore banks cannot access the NBR’s deposit auction.