Leu Rally Longest in 6 Months as Tighter Funding Policy Extended
The leu rallied for a sixth day against the euro, its longest winning streak in six months, as Romania’s central bank extended a policy of lower funding for lenders.
The currency appreciated 0.2 percent to 4.5479 per euro by 5 p.m. in Bucharest, the highest since Oct. 3. Today’s advance expands gains over the past week to 0.6 percent, the best among central and eastern European currencies tracked by Bloomberg. Yields on 2018 euro-denominated bonds traded little changed at 4.34 percent.
The central bank tightened a cap on lending to commercial banks to 4 billion lei ($1.1 billion) today, compared with 6 billion lei on Oct. 8 in its weekly auction of repurchase agreements. A similar measure helped the leu strengthen 2.5 percent in August.
“The leu receives support from the central bank and we expect it to continue to use this policy as long as the currency is threatened by further weakening,” Dan Bucsa, a London-based economist at Unicredit SpA (UCG), wrote in a note to clients today. “The amount tendered today” reflects the central bank’s perception of “the strength of depreciation pressure” on the leu, Bucsa said.
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