Romania’s Leu Falls Fifth Day as Central Bank Raises Funding Cap

The leu weakened for a fifth day after Romania’s central bank raised a cap on lending at its repurchase agreements auction, increasing the amount of funding.

The leu depreciated 0.1 percent to 4.5362 per euro by 5:15 p.m. in Bucharest, the lowest level on a closing basis since Oct. 31. Yields on 2019 Eurobonds declined six basis points, or 0.06 percentage point, to 4.92 percent, according to data compiled by Bloomberg.

The Banca Nationala a Romaniei increased the funding limit to 6 billion lei ($1.7 billion) in a weekly repo sale yesterday, compared with 4 billion lei on Nov. 5 and Oct. 29. It last offered 6 billion lei on Oct. 15. Romania’s inflation rate unexpectedly slid to 5 percent in October from 5.3 percent a month earlier, below the median estimate of 13 economists surveyed by Bloomberg.

The central banks’ measure may be seen as “a sign that the Bank is easing its grip of the foreign exchange market,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in a note today. “We see the leu stalling around 4.53 per euro today, with possible occasional spikes towards 4.54 per euro.”

Romania is scheduled to hold parliamentary elections on Dec. 9.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net