Romania’s RON hits 3-month low vs. EUR following central bank’s large repo operation

Romania’s currency, RON, declined by 0.1 percent on Tuesday against the European single currency, the exchange rate rising to 4.6658/EUR, the highest level since June 25, National Bank of Romania (BNR) data show.

On Monday, the reference exchange rate was RON 4.6596/EUR.

US dollar gained 1 percent to 4.0507 RON.

RON’s depreciation is due to higher liquidity in the money market following central bank’s intervention through weekly repo operation.

BNR injected RON 9.7 billion (EUR 2.1 billion) into the banking market on Monday, the biggest amount in the last month, through a repo operation (government securities-backed lending to banks), at a 2.5 percent yearly interest rate.

This move is designed to address liquidity shortage – and to cap interest rates in the market.

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, declined on Tuesday from 3.17 percent to 3.15 percent.

The biggest worries about Romania are its fiscal policy, political situation, and the external standing, while a possible excessive deficit procedure by the European Commission might bring troubles for RON, Ebury Romania CEO Johan Gabriels recently said in a commentary sent to Business Review.