Prima pagină » English » Romania’s Money Mkt Rates Up To More Than 45% On High Demand

Romania’s Money Mkt Rates Up To More Than 45% On High Demand

Romanian money-market interest rates soared Friday to more than 46% on foreign investors’ high demand for local currency as investors expect the Romanian currency to depreciate in the following period.
Romania’s Money Mkt Rates Up To More Than 45% On High Demand
17 oct. 2008, 13:16, English

At around 0900 GMT, overnight rates were at 19.00%- 46.13%, while monthly rates stood at 14.53%- 43.69%.

"Foreigners’ high demand for the Romanian leu has led to an extreme increase of interests on the monetary market. Foreign investors want to borrow Romanian currency to sell for euros, betting on a strong depreciation of the leu,” ING Bank Romania analyst Alexandru Chidesciuc said.

He also said that the central bank’s intervention led to euro sales and Romanian leu buying orders, which caused a liquidity crisis on the market.

“Some banks are not able to offer liquidity any more, that’s why foreign investors borrowed Romanian currency at rates of up to 70%-80%,” Chidesciuc added.

The central bank’s key rate stands at 10.25% on the year.

On Thursday overnight rates grew to 16.53-28.31%, significantly higher compared to Wednesday’s 11.77%-12.70% on the year.

The leu opened at RON3.7740 against the euro Friday, down from Thursday’s close value of RON3.7950 /RON3.8040 and was in line with the positive trend of currencies in the emerging markets. In mid-trade, the leu was trading at RON3.7655 to the euro.