The National Bank yesterday intervened on the market and bought foreign currency, putting and end to the recent steep decline of the ROL/EUR exchange rate. After a month of keeping a low profile, consolidating its decision to allow more freedom to the market to decide the exchange rate, NBR provided a valuable hint as to how heavy a fluctuation it considers acceptable: no less than 36,500 ROL/EUR and no more than 40,000-40,500 ROL/EUR.
How did it do this? The intervention was triggered by the slide in rates to 36,750-36,800 ROL/EUR. At the end of the day's trading, rates had gone up to 40,100-40,300 ROL/EUR after NBR's third round of acquisitions.
"We can verify that we intervened and did it transparently, meaning that everybody could see this. NBR's entry on the market does not mean a change of policy. On the contrary, today's (yesterday's) intervention confirms precisely what we said on November 2, namely that the National Bank would intervene increasingly infrequently (its last move was made on October 18) and that interventions would be less predictable," stated Adrian Vasilescu, advisor to the NBR Governor. He declined to comment on the reasons, saying "NBR does not explain this reason."
The central bank yesterday calculated an exchange rate of 38,235 ROL/EUR, 675 ROL more than on Friday. This rate is far from reflecting the agitation on the market, with its frequent trend reversals.
NBR thus "adjusted" the spectacular ROL appreciation that began one month ago: nearly 4% against the euro, after having been pushed to nearly 10% in nominal terms by the market earlier yesterday.
The central bank's comeback on the foreign exchange market was a "masterful" move, in the words of one market player, whereby the central bank, with relatively little money used, in three buying stages managed to keep the market in suspense, giving the directions the market needed so badly of late in small doses.
It was market players who paid the price by expecting NBR to back up the exchange rate attained after a buying round. This did not happen and the exchange rate was to fall again only to be followed by another round of buying that pulled it up, catching banks off-guard. This game lasted until the close of session.
"I don't know if anybody came out well after today. If I could find a rock I'd crawl right under it," commented one dealer at the end of the day.
Besides the losses by market players, yesterday's operations on the foreign exchange market provided valuable clues as to where the exchange rate is heading.
"Through the very successful operation yesterday the central bank pointed to the spread it envisages for exchange rate fluctuation: no less than 36,000 ROL/EUR and up to a possible 40,000 ROL/EUR," said Paul Prodan, ING Bank Romania's executive manager.
Prodan added that people find it hard to get used to these fluctuations and that "the entire market is confused, from the small depositors to the bigger clients."
This type of adjustment seemed inherent, however, considering the major change in NBR's foreign currency policy, which is getting people accustomed to the idea that the days of constant ROL depreciation are over.
razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
