Money in Romania
Romania - Money
NBR cuts rates in emergency meeting in March; points to QE program
In an emergency meeting held on 20 March which took market analysts entirely by surprise, the National Bank of Romania (NBR) cut the policy rate by 50 basis points to 2.00% and the lending facility (Lombard) rate by 100 basis points to 2.50%, while leaving the deposit facility rate at 1.50%. The NBR also announced a package of measures aimed at mitigating the impact of the widening coronavirus outbreak on households and businesses.
The special measures included the provision of liquidity to credit institutions via repurchase transactions to ensure the smooth functioning of the money market and other segments of the financial system. However, the most surprising decision was the Central Bank’s intention to buy leu-denominated government securities in the secondary market, marking the first time it would engage in such activity. Although details still abound over the workings and timeframe of the program, as well as over the value of the purchases the NBR will conduct, it is likely they will come to support the Finance Ministry’s increased debt issuance needs in order to address the economic impact of the Covid-19 pandemic.
Looking ahead, the Central Bank also stressed it is ready to cut the minimum reserve ratios on leu- and foreign currency-denominated liabilities on banks depending on how economic and financial conditions evolve. Moreover, the NBR also decided to suspend the previously announced calendar of monetary policy meetings and hold them whenever necessary, which as noted by Valentin Tataru, Romania economist at ING, hints at a “crisis-management mood”. On the currency side of things, Tataru added:
“[T]he depreciation pressures on RON will likely increase on the back of lower carry rates and improved liquidity. However, the NBR has repeatedly proven that is able to smooth the volatility and steer the currency. We expect stability on the FX front for the days to come, until the market will have more details on NBR’s bond purchase intentions.”
Romania - Money Data
|Money (annual variation in %)||8.4||9.4||9.8||11.5||8.9|
5 years of economic forecasts for more than 30 economic indicators.
Romania Money Chart
Source: National Bank of Romania.
|Bond Yield||4.49||0.23 %||Dec 31|
|Exchange Rate||4.26||-0.34 %||Dec 31|
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April 6, 2020
The Romanian leu (RON) lost ground against the euro over the past month and hit an all-time low of 4.86 per EUR on 18 March amid market fears over the fast-spreading coronavirus globally and its impact on economic activity.
March 20, 2020
In an emergency meeting held on 20 March which took market analysts entirely by surprise, the National Bank of Romania (NBR) cut the policy rate by 50 basis points to 2.00% and the lending facility (Lombard) rate by 100 basis points to 2.50%, while leaving the deposit facility rate at 1.50%.
March 12, 2020
Industrial production fell 3.1% year-on-year in seasonally- and working day-adjusted terms in January, following December’s 6.9% plunge and marking the tenth consecutive month of contraction.
March 11, 2020
Consumer prices rose 0.3% month-on-month in February, down from January’s 0.4% climb.
March 10, 2020
Annual GDP growth accelerated to 4.3% in the fourth quarter of last year from 3.0% in the third quarter which had marked the weakest expansion in over five years, according to a comprehensive estimate released by Romania’s Statistical Institute on 10 March.