Romanian Leu Ends Tad Stronger vs Euro on C-bank Support - Dealers

The leu ended at 4.2875/2895 per euro, compared to 4.2910/2940 per euro on Thursday.

The leu did not weaken beyond the 4.29-per-euro level for most of trading on Friday, one dealer told SeeNews. “It is possible it [the leu's appreciation] might be due to an intervention of the central bank in order to ease pressure on the leu resulting from the political crisis in the country," the dealer said, adding that the grim global sentiment and the ground lost by most of the other regional currencies also pointed to the central bank as the most likely source of support for the leu.

Romania’s central bank, BNR, does not comment on its foreign exchange operations.

On Thursday, Romania’s President Traian Basescu nominated Lucian Croitoru, an advisor to the central bank governor, as prime minister-designate, two days after the country’s minority government fell in a no-confidence vote.

The dealer does not rule out a short-term stabilisation on the market but sees the leu under pressure over the medium term after the International Monetary Fund (IMF) decided to postpone its second review mission to Romania under its financing agreement with the country until a new government takes office. Initially, the review mission was scheduled to start on October 21.

The IMF said in a statement on Thursday it does not anticipate an interruption in the stand-by arrangement with Romania or a change in policy as a result of the political developments. Romania signed a 20 billion euro ($29.8 billion) aid deal with the IMF, the European Union and the World Bank in March to support its crisis-hit economy.

The BNR set its reference exchange rate at 4.2937 per euro on Friday, compared to 4.2937 per euro on Thursday. For the U.S. dollar, the BNR set its reference exchange rate at 2.8798 versus Thursday’s 2.8798.

Turnover on the interbank leu deposit market rose to some 2.728 billion lei on Thursday from 2.55 billion lei on Wednesday. The BNR will issue Friday’s turnover figures on Monday.

Interest rates on overnight leu deposits fell to 10.12%/10.62% on Friday from 10.38%/10.96% on Thursday.