Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, rose on Monday to 3.30 percent, the biggest level since August 24.
On Friday, 3-month ROBOR was 3.28 percent.
The 6-month ROBOR increased to 3.52 percent, the highest level since August 3.
Compared with the end of 2017, the 3-month index rose by 1.25 percentage point, from 2.05 percent.
During the last couple of weeks, 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.
But this new surge of money market rates could trigger fresh intervention.
“While a repo auction today could calm down the market to some extent, the breakdown is a bit tricky with two days covering the current reserve period (for which we see excess cash in the system) and five the next reserve period when a liquidity deficit is expected. Hence, we could see the NBR opting for no repo today and wait for the next week to inject liquidity,” ING Bank analysts said on Monday, in a short research note.
The reserve maintenance period – 24th of one month until 23rd of the next month – is important for banks as they have to calculate minimum reserve requirement ratio on their liabilities until the start of reserve period.
Overnight implied yields continue to trade only slightly above the deposit facility of 1.50 percent but all the other tenors covering the next reserve period are trading above the Lombard rate of 3.50 percent.
The 3-month ROBOR index reached a record low of 0.68 percent in September 2016.