Romania’s 3-month ROBOR continues to decline, hits 7-month low of 2.9 pct

Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, declined on Wednesday for the fifth day in a row up to 2.90 percent, the lowest level since June 15, 2018, on higher liquidity in the market.

On Tuesday, 3-month ROBOR was 2.92 percent.

The 6-month ROBOR decreased to 3.23 percent, the lowest level since June 28, 2018.

Compared with the end of 2017, the 3-month index rose by 0.85 percentage point, from 2.05 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.

This new decline of money market rates is mainly due to higher liquidity in the market, according to analysts.

„ Governor Isarescu did not address a potential cut in the minimum reserve requirements at yesterday’s press briefing. However, there were comments regarding the downside trend in ROBOR rates, noting that current levels are in line with the general trend of inflation and thus suggesting that the central bank is comfortable with current developments,” ING Bank analysts say in a research note released on Wednesday.

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.