Banca Comerciala Romana (Romanian Commercial Bank - BCR) expects to see a higher volatility of the exchange rate either towards an appreciation or depreciation of the ROL in the coming months due to the accumulation of tensions on the forex market.
"We have to be careful. I believe an obvious volatility is building up on the forex market. We might see sudden exchange rate moves. I wouldn''t be surprised to see the exchange rate at 34,000-35,000 ROL/EUR soon, as we may similarly see the exchange rate at 37,000-38,000 ROL/EUR," stated Dan Bunea, BCR''s vice-president in charge of the treasury.
"This 36,100 - 36,200 ROL/EUR rate is a momentary reality," said Remus Serban, an official with the bank''s Treasury Department.
A significant volume of government securities in the range of hundreds of millions of euros is falling due this month, and if their holders, non-residents, decide to leave the market, then demand for foreign currency will increase substantially.
"To drive the euro to 37,000 - 38,000 ROL, net foreign currency purchases need to be worth 600 - 650 million euros," Bunea commented.
A significant euro growth would hit those that took out loans in foreign currency pretty hard, considering three quarters of the loans granted by banks are denominated in euros and dollars, which are the currencies of choice given the better interest compared with ROL. The deregulation of the capital account and the economic growth in the last few years have pushed the costs of the foreign currency amounts attracted by banks from abroad or received as deposits to levels comparable to the costs in ROL.
BCR is now trying to focus on promoting ROL loans, especially those to individual customers, to offset the growth pace of loans in foreign currency. "Promoting credits in ROL is a strategic decision. This does not mean we have halted credits in foreign currency. Whoever is willing to take the foreign currency risk can do so without any problems. No should, however, imagine that a bank in Romania will take the foreign currency risk," Bunea specified.
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