Leu Heads for First Weekly Loss in Seven on Intervention Risk

Romania’s leu slid, heading for the first weekly loss in seven, on bets the central bank may curb the currency’s gain.

The currency weakened 0.2 percent to 4.3682 per euro by 5:38 p.m. in Bucharest, extending its retreat this week to 0.6 percent. It strengthened to 4.3228 per euro on Jan. 17, the highest level in a year. Yields on Romania’s June 2016 euro-denominated notes were little changed at 3.123 percent.

The “leu’s advance from current levels of 4.36 per euro might keep market players wary of central bank interventions,” Mihai Tantaru, a Bucharest-based analyst at ING Bank Romania SA, wrote in a note today.

The Finance Ministry raised 1.1 billion lei ($339 million) of 10-year bonds at a sale yesterday, almost double the target of 600 million lei. JPMorgan Chase & Co. and Barclays Plc’s plans to include Romania in their benchmark emerging-market debt indexes has increased the appeal of the nation’s debt and currency.

The leu’s gain yesterday “occurred on hefty trading volumes, probably related to foreign inflows into the 10-year bond sale,” Tantaru said.

The central bank will need euros to make bailout loan repayments to the International Monetary Fund this year.

Romania’s local currency debt is eligible for inclusion in the JPMorgan’s GBI-EM Index Series in a rebalance on March 1, the U.S. bank said on Jan. 15. Barclays said on Nov. 6 it will add Nigeria and Romania to its emerging-market local-currency government bond index from March.

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