Romanian Leu Gains to Highest in Two Months on U.S. Budget Talks

The leu headed for the strongest level in more than two months on optimism U.S. lawmakers can reach an agreement on budget talks to avert the so-called fiscal cliff, boosting investors’ appetite for riskier assets.

The Romanian currency appreciated as much as 0.4 percent today to 4.4980 per euro, the highest since Sept. 19, and was trading at 4.5085 per euro at 4:57 p.m. in Bucharest today. The gain extends this month’s advance to 0.8 percent. Yields on 2019 Eurobonds fell three basis points, or 0.03 percentage point, to 4.658 percent, according to data compiled by Bloomberg.

The world economy is in its best shape in 18 months as the U.S. looks likely to avoid the tax increases and spending cuts known as the fiscal cliff, according to the latest Bloomberg Global Poll of investors. Treasury Secretary Timothy F. Geithner meets congressional leaders today after Republican House Speaker John Boehner said he is optimistic officials can “avert this crisis sooner rather than later.”

“The local currency was lifted today, presumably on improving tone in the international financial markets,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in note. “The scope for a firming significantly beyond the 4.50 per euro threshold looks limited as leu’s current levels seem to have already priced in a probable advance in core markets today.”

Romania’s central bank capped lending at 4 billion lei ($1.2 billion) in a repurchase agreements auction on Nov. 26, extending its limit on weekly funding introduced on Oct. 8. The bank offered 12 billion lei at the sale on Oct. 1.

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