Romania’s 3-month ROBOR again exceeds 3 pct, hits 1-month high

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, rose on Tuesday to 3.03 percent, the highest level since December 24, 2018, on lower liquidity in the market.

On Monday, 3-month ROBOR was 2.97 percent.

The 6-month ROBOR increased to 3.31 percent, the highest level since December 28.

Compared with the end of 2018, the 3-month index rose by 0.01 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 during the last couple of weeks, BNR has sterilized the excess liquidity in the market through deposit tenders aiming to defend the Romanian currency.

The rise of money market rates is mainly due to liquidity issues.

„ Today is the last day of the current minimum reserve period, with overnight trading around 2.00% as it covers two days given that tomorrow is a bank holiday in Romania. Longer tenors corrected a bit lower after the sustained upward move from previous days. With FX testing new highs by the day, the market could see it more as a “buy the dip” rather than a fundamentally driven correction,” ING Bank analysts say in a research note released on Tuesday.

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.