Romania’s Leu Gains to Month-High After Tighter Funding Extended
The leu rose to the strongest level in more than a month as the Romanian central bank extended its policy of tighter funding at its repurchase agreement auctions for a fifth week.
The currency appreciated for a fourth day, gaining 0.2 percent to 4.5133 per euro by 5:05 p.m. in Bucharest, the highest on a closing basis since Sept. 25, according to data compiled by Bloomberg. Yields on 2019 Eurobonds declined five basis points, or 0.05 percentage point, to 5.03 percent, according to data compiled by Bloomberg.
The central bank maintained a cap on funding to lenders at 4 billion lei ($1.4 billion) yesterday, compared with 5 billion lei it offered on Oct. 22, 6 billion lei on Oct. 8 and 12.6 billion lei on Oct. 1. Demand at yesterday’s repo auction was 15.6 billion lei. Governor Mugur Isarescu said on Nov. 2 he is limiting funding at repo auctions and intervening in the foreign-exchange market to support the currency.
The currency continued to gain ground today as “the central bank provides further support,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in a note today. “Given the leu is only some 1 percent firmer from two weeks ago when presumably the central bank started to act more forcefully in the market, we think they might loosen their grip somewhat.”
-- With assistance from Irina Savu in Bucharest. Editors: Ash Kumar, Alex Nicholson
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