Head of Romania’s central bank warns of expensive loans, asks for less credits in exotic currencies

The management board of BNR decided on February 4 to increase the key interest the third time in a row, up to 9 percent, marking a hike of the monetary policy rate with 2 percentage points over the past three months.

Credits will be more expensive in the following period because of the central bank's direct measures and lower liquidity on the market, Isarescu said.

Moreover, the central bank accelerated its interventions on the monetary market from the beginning of the year by drawing the liquidity in excess to maintain the interbank interests at a level close to the key interest.

Isarescu warned about the risks of contracting loans in exotic currencies. The Swiss franc has always been a “refuge currency” for investors during troubled times, Isarescu said. However, if the franc grows stronger against the leu, credits will be more expensive and the risks of not reimbursing higher, Isarescu added.

Nongovernmental credit hiked 60 percent from December 2006 to December 2007 to 148.2 billion lei.