Romanian Leu Falls From 7-Week High on Central Bank Action Bets

Romania’s leu slid from its highest level in almost seven weeks on bets the central bank may curb the currency’s gain.

The leu reversed an earlier advance that followed increased demand for the country’s debt amid record-low borrowing costs at a government debt auction yesterday. The Banca Nationala a Romaniei scrapped a limit on the size of its weekly repurchase agreements auctions on March 4, almost five months after imposing the cap, increasing money supply to commercial banks.

The leu’s volatility “coupled with thin trading volumes, point to lingering worries of central bank actions,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in a research note today.

The leu weakened 0.1 percent to 4.3582 per euro by 4:55 p.m. in Bucharest, after reaching its highest level on a closing basis since Jan. 21 in earlier trading. The currency has advanced 2 percent this year.

The central bank lent 7.3 billion lei in its repo auction earlier this week, matching bids at the currency sale. The bank, which has a managed-float policy for the currency, has restricted repo operations since Oct. 8.

The Finance Ministry raised the planned 500 million lei ($150 million) of January 2016 bonds in the first auction of fixed-income securities included in JPMorgan & Chase & Co.’s emerging-market bond index. Total demand rose to 2.1 billion lei from 1.8 billion lei at a sale on Feb. 14 as foreign investors’ interest pushed yields to a record low 5.43 percent.

“Investors’ appetite for domestic debt should continue to run strong,” Tantaru said.