Bloomberg News

Romania’s Need to Repay Euros Will Limit Leu’s Gain, ING Says

January 18, 2013

Romania’s bailout repayments this year will probably prompt the central bank to beef up its foreign-exchange reserves, limiting the leu’s gains, according to ING Bank Romania SA. The currency retreated from a year high.

The central bank is due to repay about 3.8 billion euros ($5 billion) to the International Monetary Fund.

The leu depreciated 0.4 percent to 4.3398 per euro by 5 p.m. in Bucharest, after gaining 2.5 percent this month, the best performance among emerging-market currencies tracked by Bloomberg. It climbed to the highest level in a year after JPMorgan Chase & Co. (JPM:US) said on Jan. 15 the country’s domestic bonds are eligible for its emerging-market government bond index.

The central bank is “probably trying to reduce market volatility while finding the opportunity of replenishing its reserves at the current levels,” Mihai Tantaru, a Bucharest- based economist at ING Bank Romania SA, wrote in a note today.

Romania, which secured a 20 billion-euro bailout from the IMF and the European Union in 2009, is scheduled to repay a total of about 5 billion euros this year to the Washington-based lender.

The central bank’s foreign-exchange reserves stood at 31.2 billion euros at the end of December, little changed from 31.17 billion a month earlier.

“In light of the above and also considering the commercial net demand for hard currency, we see the leu swinging inside the 4.32-4.34 per euro range for today,” Tantaru said.

Yields on Romania’s June 2019 euro-denominated bonds rose six basis points, or 0.06 percentage point, to 3.75 percent.

To contact the reporter on this story: Andra Timu in Bucharest at

To contact the editor responsible for this story: James M. Gomez at

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