Romania’s RON close to all-time low vs. EUR

Romania’s currency, RON, declined by 0.1 percent on Thursday against the European single currency, the exchange rate rising to 4.6684/EUR, the highest level since June 22 and close to all-time high, National Bank of Romania (BNR) data show.

Against the European single currency, Romania’s currency reached the all-time low of 4.6695/EUR on June 21, 2018.

Experts estimate that the central bank will continue to support the national currency.

“The central bank is still vigilant on exchange rate developments and we believe that FX stability will be the main driver of interest rate decisions, particularly if depreciation pressure on the leu intensifies. Today we look for the same 4.6600-4.6700 range,” ING bank said on Thursday, in a research note.

On Wednesday, the reference exchange rate was RON 4.6643/EUR.

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US dollar gained 0.7 percent to 4.0581 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 Thursday from 3.16 percent to 3.13 percent.