Speculative investors are now realising they have a new stream of profit - betting on the depreciation of the RON. The recent aggressive appreciation of the euro has earned profits for those that placed their bets on a weaker RON, and speculative investors have started to borrow in RON, taking advantage of the extremely low interest rates on the monetary market, in order to buy foreign currency.
When repaying loans investors only need to sell part of the foreign currency initially purchased to pay back the loan and interest, due to the increase in the exchange rate, and get to keep the rest as profits.
The aggressive foreign currency purchases yesterday pushed the euro to its highest level for the last three and a half months. Dealers'' opinions on the matter vary, given that some pin the growth on the purchases made by non-resident investors, while others believe it was due to intervention by the central bank.
The NBR yesterday calculated an exchange rate of 3.6203 RON/EUR, 2.97 bani more than the previous day. The euro has gained 6.83 bani on the RON since the beginning of the month, with a significant part of this appreciation being fuelled by direct purchases by the central bank from the forex market. After all, NBR governor Isarescu warned lately that he would no longer allow the RON to continue to appreciate in nominal terms, since this trend has stopped being backed by productivity gains in the economy.
"The increase in quotes was due to significant buy orders placed by non-resident investors. The market moved naturally and I don''t think the NBR intervened, at least not aggressively," says Liviu Olaru, senior dealer at ABN Amro Romania.
Even after the increase in the exchange rate yesterday, the euro has still depreciated in nominal terms by 7.9% against the RON since the beginning of the year.
Opinions on the market vary, and some dealers are inclined to explain the appreciation of the euro in terms of acquisitions by the central bank.
"After two days during which the market has kept almost entirely still at 3.6 RON to the euro under pressure from purchases by clients and the feeling that the central bank could be interested in buying foreign currency, the exchange rate reached a higher level of 3,6250 RON/EUR. The appreciation trend for the euro will continue in the near future, though it may be somewhat slower," says Aurelian Mihailescu, a Raiffeisen bank dealer. As soon as the official exchange rate was announced, the euro started losing ground, as buy orders stopped being placed, and rates quickly fell to 3,6050/3,6100 RON/EUR.
On the other hand, inflation is set to reach 8-8.3% by the end of the year, below the annualised 8.5% in September, although there will be some growth due to the increase in utility tariffs, central bank governor Mugur Isarescu said. During the joint meeting of the economic committees of the Senate and the Chamber of Deputies, he said that the consumer price index would go down in October in comparison with September, but would rise again in November once the controlled prices are increased. liviu.chiru@zf.ro
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