The leu retreated to the lowest in a month before the Romanian central bank’s rate-setting meeting tomorrow and as monetary policy makers weigh the impact of rising inflation.
The currency depreciated 0.2 percent to 4.5193 per euro by 5:16 p.m. in Bucharest, the weakest on a closing basis since Aug. 13. Yields on Romania’s country’s 2018 euro-denominated bond rose five basis points, or 0.05 percentage point, to 4.88 percent, according to data compiled by Bloomberg.
The Banca Nationala a Romaniei will leave its policy rate at 5.25 percent tomorrow, according to all 18 economists surveyed by Bloomberg. Romania’s inflation rate rose to 3.9 percent in August, the highest in a year, as a drought in the country pushed up food prices.
Stocks slid, the euro weakened and oil dropped for a third day after Federal Reserve Bank of Philadelphia President Charles Plosser said yesterday more bond purchases probably won’t boost growth. Spanish bonds fell, with the 10-year yield reaching 6 percent, after Catalan President Artur Mas called early elections.
“As sentiment in core markets dampened overnight we see potential for the leu to retest the 4.52 per euro threshold,” Vlad Muscalu, a senior economist at ING Groep NV in Bucharest, wrote in an e-mailed note today. “The currency is currently trading on decent volumes, which could point towards more pressure building into the leu weakening trend that we have witnessed since the start of September.”
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