From 15% to an all time low of 12% - this is the way NBR interest rates on one-month deposits by banks fell last week. The change happened without the central bank announcing it had modified the so-called "intervention rate", which stayed officially at the 16.5% set in mid January.
Yesterday saw a new low: a rate of 10.34% for purging, that is an 11.75% average
The decline in the actual rate of interest, which the NBR pays to attract cash, is continuing even after the Ministry of Finance took 1,000bn ROL from the market through the first two government bond issues released this year. In other words, the market is flooded in cash.
This spectacular drop in rates is only a matter of circumstance, and could be easily be followed by a reversal of the trend.
"The NBR position is unclear. If it sets a 16.5% intervention rate, then it has to apply it. Yet it does not. So what's the use of this signal?" asks Misu Negritoiu, ING Bank Romania's deputy general manager. He says the volatility of the foreign exchange market has also reached the monetary market and is the cause of the extremely heavy interest rate fluctuations.
Claudiu Cercel, BRD-SocGen's market operations department director, believes the central bank is doing nothing more than letting the market set its own rate. "On the one hand, it cuts the cost of liquidity purging, while on the other it is forcing a decline in interest rates on credits," said Cercel.
He believes the actual interest rate, lower than the officially announced intervention rate, is part of the preparations for the deregulation of ROL deposits by non-residents in anticipation of further reductions.
In the circumstances, the extreme decline in interest rates achieved by the Ministry of Finance for borrowing of five and two years - 7.9% and 8.9% respectively - is similarly illusive.
In other words, the Romanian monetary market seems to have become a calm market overnight - like the Budapest market, for instance, where interest rates for five-year government bonds are in the region of 7% a year. Since it is hard to believe that investors have gained blind faith in the central bank's ability to maintain a solid inflation-curbing trend, the only other explanation remains the presence of a surplus of cheap cash, including from foreign investors looking to position themselves as fast as possible on the Romanian market. razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
