Romania’s RON hits 6-week low vs. EUR following central bank’s repo move to cap interest rates

Romania’s currency, RON, declined on Tuesday against the European single currency for the third day in a row, the exchange rate rising to 4.6603/EUR, the highest level since August 13 following central bank’s repo move in order to cap interest rates, National Bank of Romania (BNR) data show.

On Monday, the reference exchange rate was RON 4.6578/EUR.

US dollar gained 0.1 percent to 3.9613 RON.

RON’s depreciation is due to higher liquidity in the money market following Romania’s central bank intervention to inject cash through repo operation.

On Monday, National Bank of Romania injected RON 6.5 billion (EUR 1.4 billion) into the money market through repo operations (government securities-backed lending to banks).

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, stood on Tuesday at 3.14 percent for the third day in a row.

The biggest worries about Romania are its fiscal policy, political situation, and the external standing, while a possible excessive deficit procedure by the European Commission might bring troubles for RON, Ebury Romania CEO Johan Gabriels recently said in a commentary sent to Business Review.