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Romania’s Leu Weakens for Fifth Day as Debt Appetite Lessens

Feb. 8 (Bloomberg) -- Romania’s leu weakened for a fifth day after investors’ appetite for the country’s local bonds faded at yesterday’s debt auction.

The currency had its longest stretch of losses since 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 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 4.3976 per euro by 5 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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