NBR quenches banks' thirst with 12bn-RON loan

While the RON was under pressure on the forex market, the NBR (National Bank of Romania) granted banks a record-high refinancing loan worth almost 12 billion RON (2.8 billion euros) at an interest rate of 8% a year, in order to alleviate the liquidity shortage on the monetary market. The 12 banks that took part in yesterday's auction have to repay the sums in four days' time, i.e. next Monday. NBR's decision came amid a worsening of the liquidity drought on the monetary market over the last few days, with banks charging interest rates as high as 14% a year on loans in RON granted to one another, i.e. four per cent more than the NBR's key interest rate, and even above the central bank's rate charged for emergency loans, which is set at 12% a year. Even after the huge loan granted by the NBR, banks continued to thirst for RON. Dealers were asking interest rates of 11% a year for one-day loans in RON. Since the beginning of the year, the NBR has granted banks short-term loans, in order to allow them to refinance government security purchases, thus indirectly allowing the Treasury to attract funds at reasonable costs. The NBR last granted refinancing loans to banks on September 7th, which amounted to 8.3 billion euros, but the sums left the market when the loans fell due, on September 14th.