Romania’s 3-month ROBOR back to 4y5m high on liquidity shortages

Romania’s three month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, rose on Friday to 3.39 percent, equaling the record high of the last four years and five months. Experts say the current rise of money market rates are due to liquidity shortages.

The 6-month ROBOR increased by 0.01 percentage point to hit a fresh 4 years and 4 months high of 3.50 percent.

The ROBOR 3M calculated for July 20, 2018, is equal to the level reached on July 5, the highest level since February 26, 2014, National Bank of Romania (BNR) data show. The 3-month rate rose by 0.03 percentage point from the previous market session.

Compared with the end of 2017, the 3-month index rose by 1.34 percentage point (+65 percent), from 2.05 percent.

Earlier this month, the central bank of Romania kept rates on hold at 2.50 percent, in line with experts’ call.

BNR governor Mugur Isarescu mentioned that monetary policy is firmer than suggested by the current rate level due to the positive gap between market rates and the key rate.

The 3-month ROBOR index reached a record low of 0.68 percent in September 2016.

Economists say that the rise of Romania’s money market rates is due to liquidity shortages.

Romania’s central bank had weekly open market operations during the last three months, absorbing excess liquidity in the market, but liquidity problems showed signs of easing at the beginning of this week.