Major exchange rate volatility

Dealers believe that these variations are due to a significant volume of transfers by foreign investors and importers who want to protect themselves from the leu’s devaluation.

Because the switch in the evolution of the leu was sudden, some of the players suspect that the National Bank has been involved, according to a statement for Business Standard by Vlad Muscalu, Chief Economist of ING Bank.

The national currency evolved in correlation with regional markets in the first half of the trading session, with the devaluation accelerating in the second half of the session compared to regional currencies.

Short-term interest rates started out Friday’s session at 8.5-9 percent. Even though some RON 3 billion (€0.79 bln) returned to the market following operations by the National Bank and the Ministry of Economy and Finance, budgetary payments were responsible for maintaining the currency demand high.

Some RON 8.5 bln (€2.2 bln) will return to the market today, and although the central bank will organize a two-week deposit auction, market players could be reticent to invest their funds for two weeks, especially since BNR will decide within one week on the monetary policy interest rate, and the market is expecting a rise of at least 50 base points.