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Dec 18, 2009 18:25 EEST
December 18 (SeeNews) - The Romanian leu closed stronger against the euro on Friday, as dealers said the country's central bank may have intervened to support it.
Romania's central bank, BNR, does not comment on its activity on the foreign exchange market.
The leu closed at 4.2050/2100 per euro versus 4.2125/2160 per euro on Thursday.
The leu opened at an intraday low of 4.2120/2170 per euro and appreciated to hit an intraday high of 4.2000/2030, one dealer told SeeNews, adding that an the country’s central bank might have intervened to support the local currency.
The dealer added that once a new government is formed, confidence in the leu and in the Romanian economy will come back.
Romania's minority cabinet fell in no-confidence vote in October and continued to govern as an interim cabinet. The country needs a new government fast in order to put an end to a two month-old political deadlock and restart key reforms of the economy and the justice system. These conditions are vital for winning back the trust of international lenders, a key condition for the release of the next instalments of a 20-billion euro ($billion) bailout package led by the International Monetary Fund (IMF).
On Thursday, recently re-elected President Traian Basescu nominated interim premier Emil Boc as prime minister-designate and said he will have to move his government through parliament by December 23. The IMF has that Romania will probably receive the third tranche of the stand-by loan in February.
"Political uncertainty decreased last week, while the Stand-By Agreement with the IMF has good chances of remaining on track. This should be favourable for both the leu exchange rate and bond prices from a medium- and long-term perspective," Raiffeisen Research said in its CEE weekly bond markets outlook.
Romania's central bank, BNR, set its reference exchange rate at 4.2057 lei per euro on Friday, compared to 4.2232 on Thursday. For the U.S. dollar, the BNR set its reference exchange rate at 2.9214 lei versus Thursday’s 2.9454.
Turnover on the interbank leu deposit market fell to 2.794 billion lei on Thursday from 2.974 billion lei on Wednesday. The BNR will issue Friday’s turnover figures on Monday.
Interest rates on overnight leu deposits rose to 11.31%/11.81% on Friday from 11.11%/11.61% on Thursday.
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