The leu advanced to the highest level in a month as foreign investors bought Romania’s local debt a day before its inclusion in JPMorgan & Chase & Co. (JPM)’s debt market index.
The currency appreciated before the March 1 entry and addition to Barclays Plc (BARC)’s bond measure from March 31. European stocks climbed as European Central Bank President Mario Draghi and Federal Reserve Chairman Ben S. Bernanke signaled they would maintain monetary support measures, boosting appetite for riskier assets.
The leu’s move is linked “to some more foreign inflows into local currency debt instruments,” Mihai Tantaru, a bucharest-based economist at ING Bank Romania SA, wrote in a note today. The currency’s strengthening is “coupled with falling yields for two-year to five-year bonds on the secondary market,” Tantaru said.
The leu appreciated 0.2 percent to 4.3592 per euro, its highest closing level since Jan. 21, by 5:10 p.m. in Bucharest, after jumping 0.4 percent yesterday.
“From March, the structural flow of real money into Romanian bonds will begin, which will mean better balance of payments support for currency appreciation,” Roderick Ngotho, a London-based strategist at Royal Bank of Scotland Group Plc, wrote in a note yesterday. “Long leu is a good idea for the medium term.”
Romania’s October 2015, January 2016 and July 2017 bonds currently meet the criteria for index inclusion as they demonstrate the highest degree of liquidity, according to JPMorgan.
The country raised 4.03 billion lei ($1.2 billion) in leu- denominated debt in February, more than the 3.7 billion lei planned, after raising a record 11.4 billion lei last month.
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