Jan. 31 (Bloomberg) -- Romania’s central bank sold euros to shield the leu from a selloff roiling emerging markets, according to two currency traders in Bucharest.
The central bank sold between 600 million euros and 1 billion euros in the past three days, said the traders, who asked not to be identified in line with their respective banks’ policies. The leu strengthened 0.3 percent to 4.5020 per euro at 6:10 p.m. in Bucharest, the highest since Jan. 7 on a closing basis. Today’s advance brought the appreciation to 1.1 percent in the last four days and is the third-best among the 24 emerging-market currencies monitored by Bloomberg.
The leu climbed 0.7 percent against the euro this week, compared with declines seen in the Hungarian forint, the Czech koruna and the Polish zloty, according to data compiled by Bloomberg. Emerging-market currencies slumped this month as a report showed China’s economy slowed and the U.S. Federal Reserve moved ahead with a planned reduction in its record monetary stimulus.
“The central bank is trying to limit the spill over from the emerging-market storm,” Vlad Muscalu, an economist at ING Bank Romania SA, said in an e-mailed response to Bloomberg questions.
The Romanian economy grew 4.1 percent in the third quarter, the fastest in two years, helped by a growth in exports and a bumper harvest season. The central bank “is counting on the country’s solid fundamentals and the relatively high economic growth,” Muscalu said.
Romania’s central bank has a managed-float policy for the leu. The bank’s spokesperson Mugur Stet declined to comment on market interventions, in line with the regulator’s policy.
The Fed reduced this week the pace of its bond buying in a second straight meeting. It reduced the monetary stimulus by $10 billion to $65 billion a month.
The Romanian central bank, which is scheduled to hold it’s next rate setting meeting on Feb. 4, cut its key rate to a record 3.75 percent on Jan. 8. It unexpectedly lowered the minimum reserve requirements for leu liabilities to 12 percent from 15 percent and for foreign-currency ones to 18 percent from 20 percent.
On the same day, Governor Mugur Isarescu said “I don’t see any imminent danger of a significant depreciation.”
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