The euro/leu exchange rate cannot fall below RON 5, Governor of the National Bank of Romania (BNR) Mugur Isarescu said on Friday, adding that lately the central bank has not intervened in the market.
"Maybe it's a wish. There is no way it can go down. Less than RON 5 no. So, I said that there is a period of relative stability of the exchange rate determined, on the one hand, by capital inflows, as well as the inflows of European funds. I can make you a statement that I usually don't make and no one at the national bank does. I can tell you that since the summer we have hardly intervened. We intervened several times and bought currency to maintain this relative stability. And what does the fact that the foreign exchange market is stable show us? I can make a comment without being criticised. It shows us that the markets, the domestic money market, the foreign markets, the foreign exchange market are satisfied with the current combination of the level of the interest rate in lei, the level of the exchange rate, the movements of capital inside and outside the European Union. We have nothing to disturb the market. So that we can get on top of it and do what to it? We leave it alone. Why? If someone were to ask me, in recent months we really have a kind of free floating, in the sense that we do not intervene on the market," said Isarescu when asked by journalists if we could see an appreciation of Romania's national currency.
Also, asked about the possibility of reducing the monetary policy rate, the BNR governor said that at the moment there is only one element that could be taken into account for a possible reduction of the monetary policy rate, and that is the fact that ROBOR has fallen below the monetary policy rate.
"Inflation is where it is. Interest rates are real negative. You think when you have real negative interest rates, let's not say substantial, but obvious, 9 or so at the hundredth rate of inflation and 6.5% monetary policy rate. We would definitely disturb the confidence of the markets So a reduction now does not help anyone. And a discussion about the discount does not help anyone at all, on the contrary, it weakens confidence. We are not going to do that. We will not make such a mistake," Isarescu said.
The BNR Board of Directors on Wednesday decided to keep the monetary policy interest rate at 6.50% per annum.
It also decided to keep the interest rate on the lending facility (Lombard) at 7.50% per annum and the interest rate on the deposit facility at 5.50% per annum, as well as to maintain the current levels of the minimum reserve requirement ratios for liabilities in lei and foreign currency of credit institutions.
The three-month ROBOR index, based on which the cost of RON -denominated consumer loans with variable interest rates is calculated, was at 6.29% per annum on Friday, according to data published by the National Bank of Romania (NBR). The six-month index, used in the calculation of interest rates on RON-denominated mortgage loans with variable interest rate, is 6.44% per annum, and the 12-month ROBOR decreased to 6.64%.
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