Bloomberg News

Romanian Leu Set for Highest Close in Three Weeks Against Euro

April 09, 2013

Romania’s leu gained for the fourth consecutive day against the euro, heading for the highest closing level in more than three weeks.

The leu appreciated 0.1 percent to 4.3990 per euro by 5:54 p.m. in Bucharest, boosting this year’s advance to 1.2 percent, according to data compiled by Bloomberg. The currency closed at 4.3915 on March 15.

The government raised the planned 600 million lei ($178 million) in a reopening of two-year bonds at auction yesterday as the yield slid to 4.99 percent from 5.18 percent for similar- maturity bonds sold on March 14. That’s the first time the rate has slid below 5 percent since the central bank started recording the data in 2005.

“We read the result as positive, as the yield was at the lower end of market quotations, while the demand for the instrument was fairly high, amounting to nearly 2 billion lei,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania SA, said in a note today.

Banks received 178 million lei at a repurchase auction yesterday, the lowest amount since June 2011, after the central bank provided funding in line with demand for a sixth week. The policy pushed Romania’s interbank offered rate, known as ROBOR, to a two-week low of 1.6 percent today, below the central bank’s main interest rate of 5.25 percent.

The central bank scrapped a limit at its weekly repurchase operations on March 4.

The country has benefited from foreign capital inflows into its debt amid inclusion in major emerging-market indexes. JPMorgan Chase & Co. and Barclays Plc included some of Romania’s bonds into their government debt indexes last month. The inclusion sparked foreign investors’ interest and helped lower yields on leu-denominated debt to record lows.

To contact the reporters on this story: Andra Timu in Bucharest at atimu@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editors responsible for this story: James M. Gomez at jagomez@bloomberg.net; Balazs Penz at bpenz@bloomberg.net.


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