The single European currency has again surged against the US dollar on the international markets, which propelled the euro to a new record-high against the ROL yesterday in Bucharest - 40,501 ROL for one euro.
Although the euro has been climbing steadfastly for eleven trading sessions in a row, yesterday's surge took even the most pessimistic forecasters by surprise - for a while the single European currency was worth 1.2238 USD.
Last week's international turmoil, however, has not alarmed the Bucharest market players, as the dealers were extremely reserved towards exposure to the risk linked to the uncertain evolution of the EUR/USD quotations.
Although last year, for instance, any changes in the EUR/USD rates on the international markets were quickly followed by similar adjustments in Bucharest, things have changed, as dealers are growing tired of fighting against the windmills.
Take, for example, what happened several days ago on the interbank market. The ROL/EUR and ROL/USD quotations were set at a certain level when the trading sessions opened and stayed put all day, with very slight fluctuations. Moreover, trading volumes were rather small - interbank operations were worth some 30 million euros on Friday and, according to dealers, they did not exceed 25 million euros yesterday, either, which shows that banks are still weighing their options.
"The market opens straight up or down and, with small exceptions, it stays that way all day. The old times' momentum is gone, also because we have seen how all the forecasts on the EUR/USD rates have been repeatedly demolished this year," a dealer said.
Still, the ROL's depreciation against the euro has reached 15.99% this year, whereas the American currency has gained 0.86% against the domestic currency. On the other hand, the ROL slid 9.42% against the currency basket (60% EUR/40% USD).
It has become obvious that the forex market shakeups have mostly affected those paying back loans in euros. Following the rather insignificant increase posted by the ROL/EUR rates in 2001, the euro had become the currency chosen by most of the loan applicants. However, their choice was not very lucky. After its 23% surge in 2002, the euro has jumped another 16% this year and it looks like it will not stop soon. Those paying back loans also have another burden to bear - the interest rates, which average 8-9 percent annually. If expressed in ROL, this cost matches a 24-25% interest rate, which is close to the level applied to ROL-denominated loans.
The share of euro-denominated loans has been growing in the past two years, up to 48%. Traditional loans are also joined by the leasing contracts, as the bulk of this particular type of financing is also expressed in euros.
Fearing a surge in the ROL/EUR rates, which would seriously hurt the revenues of those paying back loans in euros, the central bank has repeatedly said that foreign currency is not the best choice when applying for a loan.
But who stands to gain from this situation? The US dollar fans. It may seem incredible, but the dollar's quotations in ROL are now lower than they were early this year, so those who borrowed dollars are now happy they made this choice. oana.nuta@zf.ro
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