Briefing Romania

Yesterday we saw quite low turnover on the FX market, which meant that the EUR/RON traded within a very narrow 4.7450-4.7480 range for most of the day. Thursday’s no-confidence motion is likely the 'wait-and-see' event which could induce some short-term volatility if it passes.

The Aug-2022 auction witnessed somewhat cautious bidding interest. The Ministry of Finance allocated its RON500 million target at 3.51% average and 3.54% maximum yields. Bid-to-cover wasn’t that great either, coming at 1.2x. Overall, the fixed income market is likely to turn more defensive ahead of the no-confidence vote.

Slightly surprising, the central bank’s deposit auction garnered RON4.9 billion in demand, suggesting that banks have a relatively comfortable liquidity position these days. Hence, we’ll likely see the front end hovering in the 2.00-2.50% range for the rest of the week.