Briefing Romania

Stability is the name of the game these days for the EUR/RON. The pair traded almost flat at 4.7500 for most of yesterday’s trading session and closed marginally lower, around 4.7480.

The RON500 million Aug-2022 auction came in pretty decent though our call was a touch bolder, at least demand-wise. Still, the 1.2x bid-to-cover and 3.98%/4.03% average and maximum yields made for a good result. Otherwise, the market doesn’t seem to be following a trend these days. Today’s minutes from the National Bank of Romania could stir things up a bit, as Governor Mugur Isarescu was quite hawkish in the last press briefing.

In the money market, liquidity is slowly making its way back into the system, pushing the front-end implied yields below the 3.50% Lombard rate. The pace at which rates have been moving lower should diminish as we approach the 2.50% key rate, where the NBR stands ready to mop up any surplus liquidity.