Romanian Leu Weakens vs Euro on Government Collapse, Dealers Suspect C-bank Intervention

The leu ended at 4.2570/2620 per euro, compared to 4.2165/2195 per euro on Wednesday.

The market was highly volatile, one dealer told SeeNews. The opened near the 4.22 per euro mark and started to depreciate after the announcement of the collapse of the nine-month old coalition cabinet.

“We think that the central bank has intervened, trying to keep the leu near the 4.21 per euro mark but then it gave up,” he said.

The central bank, BNR does not comment on its foreign exchange operations.

All ministers from left-wing Social Democratic Party, PSD, stepped down on Thursday following the endorsement of the dismissal of Interior Minister Dan Nica, affiliated to PSD, by the country' President Traian Basescu.

Prime Minister Emil Boc, who also is leader of centre-right Democratic-Liberal Party, the other party in the nine-month old coalition cabinet, on Monday dropped Nica as Interior Minister and Deputy Prime Minister, saying that Nica's statement about a possible vote-rigging in the forthcoming presidential elections is unfounded and inappropriate for a cabinet member. On Tuesday he nominated PD-L member Vasile Blaga to replace Nica.

BNR set its reference exchange rate at 4.2495 per euro on Thursday, compared to 4.1981 per euro on Wednesday. For the U.S. dollar, the BNR set its reference exchange rate at 2.9163 versus Wednesday’s 2.8619.

Turnover on the interbank leu deposit market fell to 2.467 billion lei on Wednesday from 3.389 billion lei on Tuesday. The BNR will issue Thursday’s turnover figures on Friday. BNR on Thursday injected 11.97 billion lei on the interbank money market in a four-day repo deal at a rate of 8.0%.

Interest rates on overnight leu deposits rose to 11.72%/12.23% on Thursday from 10.96%/11.46% on Wednesday.