Romanian Leu Gains to 11-Month High on JPMorgan Bond Index Entry

The leu strengthened to the highest in more than 11 months as JPMorgan Chase & Co. (JPM) said Romanian bonds are eligible for its emerging-market government bond index.

The currency appreciated 1 percent to 4.3432 per euro by 7:02 p.m. in Bucharest, the highest level since Feb. 3 on a closing basis. Yields on Romania’s June 2019 euro-denominated bonds slid six basis points, or 0.06 percentage point, to 3.819 percent.

Romania is eligible for entry into the JPMorgan GBI-EM Index Series, and is “currently slated for inclusion” in the March 1 rebalance, the bank said in an e-mailed note today. Inclusion, which is subject to final determination, will be in a phased approach over a three-month period ending May 1. Romania’s weighting on completion is estimated at 0.54 percent in the GBI-EM Global Diversified index, according to the note.

“Romania’s inclusion into the JPMorgan bond index will attract a lot of inflows from foreign investors which are currency positive,” Esther Law, a senior emerging-market strategist at Societe Generale SA in London, said in a message today. “This is especially true with the current low non- resident holdings of local bonds.”

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net.

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

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