surprise decision of the National Bank of Romania to cut theminimum foreign reserve requirements ratio on foreigncurrency-denominated liabilities from 25% to 20%, thereby releasingover one billion euros to banks, is interpreted by bank analysts asa signal encouraging lending and indirectly the economy.
In general, foreign currency-denominated loans are seen as analternative way to support investments and real estateacquisitions.
"We see the NBR's decision as an attempt to prop up economicgrowth amid inflationary pressures limiting the possibility ofcutting the key interest rate," comments Eugen Sinca, analyst withthe BCR. The NBR has kept its key interest rate at 6.25% a year,which has remained unchanged since May last year.
In turn, Florian Libocor, chief economist of the BRD, believesthe central bank is trying to send a positive message. MelaniaHăncilă of Volksbank believes banks will be stimulated in this wayto become more aggressive when it comes to lending and will lowerinterests. Another possible interpretation would be that the NBR ispaving the way to a new foreign-currency bond issue of the FinanceMinistry, as it did in 2009.
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