Romania’s RON hits 2-week low vs. EUR; USD above 4 RON

Sorin Melenciuc 29/05/2018 | 14:06

Romania’s currency, RON, lost 0.24 percent against the European single currency on Tuesday, the exchange rate rising to 4.6397/EUR, the highest level since May 10, National Bank of Romania (BNR) data show. US dollar gained 1.9 percent to reach 4.0284 RON, the highest level since July 6, 2017.

On Friday, the reference exchange rate were RON 4.6288/EUR and RON 3.9524/USD.

Experts say the RON’s depreciation is due to higher liquidity in the money market on lower intervention decided by the central bank.

On May 7, Romania’s central bank raised the monetary interest rate from 2.25 percent to 2.5 percent, the highest level since February 2015, in line with economists’ expectations, who see the decision as a consequence of upward revision of the inflation forecast.

Following the central bank’s move, Romania’s money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, reached a 3.5-year record of 2.82 percent on Tuesday.

The Romanian central bank also had seven open market operations during the last seven weeks, absorbing excess liquidity in the market.

But central bank’s intervention on Tuesday absorbed only RON 1.8 billion through 1-week deposit tender, compared with RON 6.2 billion on May 21.

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