Romanian Loans Will Continue To Favor Euro – BRD Official

He said the local refinancing market offers poor support, and banks can continue to refinance their operations through shareholders, mother-banks, respectively in Euro.

In addition, the euro-leu swap market, which could provide liquidity in Leu, is limited. On the other hand, liquidity in local currency has high volatility because of the central bank’s real or “suspected” interventions, as well as the difficulties in anticipating the State Treasury’s liquidity.

"It is likely that at the end of April we will once again bare witness to an increase in interest rates and a lack of liquidity as it happened in the past year. Simple anticipation will have an effect on the market’s interest rates," said Cercel, in the seminar “Monetary policy: evolutions and challenges," organized by the Romanian central bank.

He thinks that mother-banks will continue financing, even if at a slowed pace.

In addition, banks will be able to draw syndicated loans in Euro, or from financial institutions, such as the European Bank for Reconstruction and Development or the European Investment Bank.

However, Cercel also anticipates a revival of Romanian banks’ appetites for bonds in leu, even if the market lacks the necessary depth.

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