Romanian Leu Weakens for 2nd Day After Bank Loosens Repo Limit

The Romanian leu weakened for a second day after the central bank increased the amount it offers to commercial lenders at weekly repurchase-agreement auctions.

The currency depreciated 0.4 percent to 4.3873 per euro, the lowest level on an intraday basis since Jan. 15, at 12:55 p.m. in Bucharest today. Yields on Romania’s July 2019 euro- denominated bonds rose 2 basis points, or 0.02 percentage point, to 3.85 percent, according to data compiled by Bloomberg.

The Banca Nationala a Romaniei loosened the funding cap to 9 billion lei ($2.8 billion) today from 6 billion lei a week earlier, the central bank said today in its auction announcement. The bank has restricted leu sales at its repo auctions since October to help prop up the currency.

An International Monetary Fund mission will end a visit to Bucharest tomorrow and will present its conclusions after reviewing the country’s progress under a 5 billion-euro ($6.7 billion) precautionary agreement. Romanian Prime Minister Victor Ponta said on Jan. 25 that he asked for an extension of the loan, which expires at the end of March, until June to complete “more structural reforms.”

The Romanian Finance Ministry also said on Jan. 25 that the 2012 budget deficit totaled 14.8 billion lei, or 2.5 percent of gross domestic product, above the target of 2.2 percent of GDP agreed with the IMF.

To contact the reporter on this story: 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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