Romanian Leu Gains to Five-Month High After Record Debt Sale

Romania’s leu strengthened to a five-month high after Prime Minister Victor Ponta’s nomination for a second term as prime minister allowed the Finance Ministry to raise the most debt in 10 months in December.

The currency appreciated 0.1 percent to 4.4450 per euro by 12:50 p.m. in Bucharest. The currency added 0.6 percent this week, making it the best performer among eastern European peers tracked by Bloomberg. The yields on Romania’s euro-denominated bond due in June 2016 declined six basis points, or 0.06 percentage point to a record 2.98 percent.

The Finance Ministry raised 3.4 billion lei ($1 billion) in three-year bonds yesterday, more than 11 times the planned offering. The sale boosted the total amount borrowed this month to 8.06 billion lei, the most since February on the domestic market, according to Bloomberg calculations.

“The local currency continued to advance in the aftermath of a resoundingly successful bond auction,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in a note today. “Keeping in mind the possible hefty natural demand for hard currency at the end of the year, we remain cautious on further significant leu advances.”

The currency is likely to remain inside a corridor of 4.44 to 4.46 per euro range today, Tantaru said.

Ponta’s cabinet, which includes a new finance minister, will probably seek a confidence vote in parliament today. Ponta was nominated by rival President Traian Basescu after his ruling coalition secured a two-thirds majority in the legislature.

The government will hold talks with the International Monetary Fund and the European Union in January to review the current 5 billion-euro ($6.6 billion) precautionary accord.

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