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Romanian Leu Heads for Worst Weekly Slide in Four Months

Romania’s leu weakened for a fifth day, heading for its worst weekly slide in four months, after investors’ appetite for the country’s local bonds faded at yesterday’s debt auction.

The currency headed for its longest stretch of losses from Jan. 1 after the central bank lifted a limit on the size of its weekly repurchase agreement auctions on Feb. 4 and demand at the government’s bond sales plunged. The leu gained 1.8 percent over the last month as JPMorgan Chase & Co. said it would include some of Romania’s debt into its emerging-market bond index from March.

“For now, we remain in a state of very precarious equilibrium” for the leu, Mihai Patrulescu, a Bucharest-based senior economist at UniCredit Tiriac Bank SA wrote in a note today. “Market interest for leu-denominated bond has cooled down since January and demand conditions deteriorated.”

The leu declined less than 0.1 percent to 4.3963 per euro by 3:06 p.m. in Bucharest, bringing its loss this week to 0.6 percent, according to data compiled by Bloomberg.

Romania raised 500 million lei ($153 million) in five-year bonds yesterday, with the average yield rising 39 basis points, or 0.39 percentage point, to 5.79 percent. Demand plunged to 852 million lei from 3.9 billion at a similar-maturity bond auction on Jan. 17.

The Banca Nationala a Romaniei increased the auction limit to 10 billion lei ($3.1 billion), from 9 billion lei a week earlier as commercial banks’ demand for the leu reached a record 38.5 billion lei.

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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