IMF to visit Romania on 9 May

 - 27.04.2011

The RON firmed marginally on Friday, closing the day at 4.0815/EUR. It continued grinding higher early today and traded past the 12-month high of 4.0775/EUR. Although breaking this threshold could accelerate the gains we doubt this could be the case for today as market players may be more restrained than usual as they return from Easter holiday. IMF review is to start tomorrow with a visit planned to take place to 9 May. The other news making the headlines is that, according to the local press, the executive dropped the 2015 euro-adoption target date in a convergence plan it is to send to the EC. While not mentioning any new target date, the plan reportedly talks of entering ERMII in 2013-2014, not 2012 as previously envisaged. This implicit delay is in line with our expectations, comments from high officials and, judging by the price action, probably also shared by most market participants.

The RON money market was very active on Friday as liquidity needs increased probably on expectations of large budget payments. Cash traded as high as 6% and ON ROBOR fixed at 6.39%, just above the 6.25% key rate. The NBR stepped into the money market and injected RON0.9bn through a 5D repo operation and expectations for further operations are likely to cool any potential gains from current levels. Rates further out the curve (1M, 3M) were not actively traded with the last levels reported being above 5%. After a prolonged period of loose liquidity conditions and only a session with high short-term rates we doubt market players will believe rates are to remain elevated so we favour a static development in rates further out the curve, expecting some softening maybe towards the end of the week.

Source : bne