Bloomberg News

Romanian Leu Gains Second Day After Central Bank Tightens Supply

October 17, 2012

The leu rose for a second day after Romania’s central bank capped funding for lenders at its one- week repurchase agreements auction, tightening money supply.

The currency gained less than 0.1 percent to 4.5738 per euro at 12:18 p.m. in Bucharest, according to data compiled by Bloomberg. Yields on 2018 euro-denominated bonds fell one basis point, or 0.01 percentage point, to 4.063 percent.

The central bank capped lending to commercial banks at 6 billion lei ($1.7 billion) on Oct. 15 for a second time this month, supporting the leu. Demand for funding at the one-week repo auction rose to a record high of 21.4 billion lei. The bank’s decision to limit liquidity for commercial banks on Oct. 8 followed the currency weakening to a two-month low on Oct. 5.

The central bank’s “liquidity management kept losses in check,” BRD-Groupe Societe Generale SA (BRD) analysts wrote in a note to clients today.

The analysts expect the leu to trade between 4.55 per euro and 4.60 per euro today, according to the note.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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