Romania’s 3-month ROBOR hits fresh 7-month low

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, declined on Wednesday to 2.87 percent, the lowest level since June 7, 2018, on high liquidity in the market.

On Tuesday, 3-month ROBOR was 2.89 percent.

The 6-month ROBOR decreased to 3.20 percent, the lowest level since June 25, 2018.

Compared with the end of 2018, the 3-month index declined by 0.15 percentage point, from 3.02 percent. The 3-month ROBOR index reached a record low of 0.68 percent in September 2016.

Since the end of November, the National Bank of Romania has stopped injecting liquidity into the money market through a repo operation (government securities-backed lending to banks), a move designed to address liquidity shortage – and to cap interest rates in the market.

But on Monday, BNR has sterilized the excess liquidity in the market through a deposit tender of RON 12.9 billion.

The new decline of money market rates is mainly due to the minimum reserve period.

„Cash rates have resumed a downward trend as we approach the end of the minimum reserve period. Overnight implied yields closed around 1.70 percent while longer dated tenors remained unchanged,” ING Bank analysts say in a research note released on Wednesday.

The Romanian government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, calculated at the current ROBOR 3M-6M level.