Bloomberg News

Romanian Leu Weakens Second Day; Foreign Bond Yields Decline

November 20, 2012

Romania’s leu weakened for a second day after the country sold less debt than planned yesterday as the central bank maintained a cap on liquidity provided to lenders for a seventh week while demand soared to a record.

The leu depreciated less than 0.1 percent to 4.5361 per euro by 1 p.m. in Bucharest. Yields on 2019 Eurobonds fell one basis point, or 0.01 percentage point, to 4.91 percent, according to data compiled by Bloomberg.

The Banca Nationala a Romania maintained a cap on funding at 6 billion lei ($1.7 billion) yesterday even as demand rose to 30 billion lei, according to data compiled by Bloomberg, keeping funding tight for a seventh week at its repurchase agreements auction. Rising yields for leu-denominated debt prompted the Finance Ministry to raise only 407 million lei in 2014 notes, below its 500 million lei target.

“The recent gains of the leu looked artificial, driven largely by the central bank,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, wrote in an e-mailed note today. “Therefore, we expect the leu to continue to move sideways inside the 4.53-4.55 per euro range today.”

A campaign for the general elections started on Nov. 9 as the ruling coalition of Prime Minister Victor Ponta goes head- to-head with the opposition party supporting president Traian Basescu.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

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


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