May 19 (SeeNews) - The immediate objective of Romania's central bank is to ensure the liquidity needed to finance budget expenditures and the real economy amid the relative stability of the leu’s exchange rate and the gradual cut in interest rates, its governor said.
Romania's central bank injected an average 13 billion lei ($2.9 billion/ 2.7 billion euro) in the market on a daily basis between April 1 and May 15, and bought government securities worth a total of 3.1 billion lei by mid-May in order to preserve the regained stability following peak tensions caused by the coronavirus outbreak at the end of March, central bank governor Mugur Isarescu said in a statement published on the bank's website on Monday evening.
The size of these liquidity injections is also highlighted by the fact that in February the bank conducted liquidity-absorbing operations, whose daily average stood at around 3 billion lei, he added.
After the downward adjustment recorded in response to the monetary policy rate cut from 2.50% to 2%, the three-month Romanian Interbank Offer Rate (ROBOR) rate declined from 3.24% in March to 2.44% in mid-May. Also, the EUR/RON exchange rate saw lower fluctuations, in a narrow range of 0.4%, which had favourable implications for the debt service in foreign currency and the cost of imports, as well as for the expectations on macroeconomic developments, Isarescu also said.
He noted that between April 1 and May 15, the finance ministry successfully launched 14 issues on the domestic primary market for government securities, totalling around lei 11 billion, most of which were markedly oversubscribed.
Reference rates on the secondary market for government securities have followed a steeper downward path since the beginning of April up to now, the central bank governor also said.
On March 20, Romania's central bank cut its monetary policy rate to 2.0% from 2.5% as part of a package of measures aimed at mitigating the impact of the coronavirus crisis on households and companies.
(1 euro=4.8392 lei)