Romania’s 3-month ROBOR hits fresh high on liquidity shortage due to tax payments

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, rose on Thursday for the fifth day in a row up to 3.39 percent, the highest level since August 6, on liquidity shortage due to tax payments deadline.

On Wednesday, 3-month ROBOR was 3.35 percent.

The 6-month ROBOR increased to 3.58 percent, the highest level since March 2014.

Compared with the end of 2017, the 3-month index rose by 1.34 percentage point, from 2.05 percent.

Since October 1, National Bank of Romania did not inject liquidity into the money market through repo operations (government securities-backed lending to banks), a move designed to address liquidity shortage – and to cap interest rates in the market.

This new surge of money market rates is mainly due to liquidity shortage generated by monthly tax payments deadline.

“Today is the deadline for budget payments and we could see a peak in the front-end implied yields, but a meaningful decline is unlikely before an eventual repo on Monday. The longer tenors corrected a bit as paying interest has likely eased and shifted some 5bps lower across the curve,” ING Bank said on Thursday, in a research note.