Now that the jitters of bringing the card systems back online are over, it is the turn of the forex market and the stock exchange to start dealing with the new ROL (RON). How much will the "hard ROL" weigh in euros, that remains to be seen, after the "old" ROL was pushing to break the 36,000 ROL/euro threshold last week.
Dealers expect the RON to appreciate in the next few days, continuing last weeks'' trend. In the last day of trading (Wednesday) of last week, rates had gone down below 36,000 ROL/EUR on the forex market. The market closed above this level, as dealers suspected a discrete intervention on the part of the central bank.
"I believe they will keep selling, yet I cannot tell exactly how far the exchange rate will go down. I don''t think there will be any problems with the new quotes," says Bogdan Mihoc, HVB Bank treasury director.
Claudiu Cercel, the head of BRD''s market operations department believes calculating the exchange rate in RON will not change the situation on the forex market. He estimates the fluctuation band of the quotes will maintain between 3.58 - 3.61 RON for one euro.
The exchange rate went below 36,000 ROL/EUR twice last week, but NBR stepped in to contain the appreciation of the ROL. Dealers, however, are saying that in case it does not intervene again, the euro could rapidly go down towards 35,500 ROL.
Trading on the capital markets will be resumed today, after a one-week holiday. The investors and traders'' cautiousness to avoid mistakes in the calculations or trading orders in the new currency could lead - brokers say, to a decline in the traded value in the first days of trading. The lower value could, however, overlap with rises in quotes, due to the psychological effect of the prices that appear lower. "I expect lower volumes in the first days of trading. Not necessarily because the RON will be harder to work with, but because of the many people afraid of making mistakes. I believe traders will get used to the new prices in a couple of days, but in the long run if trading increases on a specific stock, the market might cringe," says Daniel Pocorea, head of operations with BRD Securities, BRD-SocGen''s brokerage firm.
Using four decimals for prices will mean more work for traders, as they will have to push more keys to input a trading order. "We''ll have more keyboard work to do for the new prices, but we are not such a big market as to say this will make our work harder," Pocorea specified.
Last week was the only week, except for the Christmas breaks, in the Stock Exchange''s history when no transactions were concluded. The Stock Exchange''s Christmas holidays have always been followed by a week of strong growth in prices, a thing attributed to the state of mind brokers had after the holiday. Brokers are not ruling out a similar occurrence this week.
"Significant price hikes are not out of the question. I think the market could rather progress "undetected" by 3-4% in the first few days. In the end the difference between 1.32 RON and 1.35 RON doesn''t look like anything significant," says Octavian Dragolea, head of European Securities.
liviu.chiru@zf.ro ; vlad.nicolaescu@zf.ro
Welcoming the RON
It''s almost midnight. The countdown begins and silence sets in the hallway of BRD''s headquarters. Six more seconds to go, 5, 4, 3, 2, 1. "Mr. President, if you please!" Traian Basescu walks to the ATM and inserts the card. Tension grows. Will it work? He keys in the PIN and in a matter of seconds the cash dispenser "spits out" the first RON. "Well, it worked!" Mugur Stet, NBR''s spokesman tells BRD''s card division director Dana Demetrian, who sighs in relief. The ordeal is not over, though, with two more withdrawals to go: by Premier Calin Popescu Tariceanu and Governor Mugur Isarescu. "It will dispense euros directly to Isarescu," someone in the audience jokes. The operation is a success. "We have people standing by and would have dispensed the money anyway, even if they had keyed in the wrong PIN. At any rate, we were really nervous about this," confesses Sorin Popa, deputy general manager of BRD-Groupe Societe Generale.
This is how the first RON made their entrance on the market, during a ceremony organised by Ziarul Financiar and BRD on Friday night, attended by highest-ranking officials, bankers and politicians.
"Poor ROL, it''s become almost like a stray animal. Yet through the efforts of the governments that succeeded each other and of the National Bank we have come to replace a ROL that was hardly breathing with a hard, strong ROL, a true national ensign. I wish the RON to be healthy, strong, and grow as powerful as to take the dollar head-on! Let''s hope it won''t eat the euro," President Basescu said holding the new bills in his hand.
He added that besides the banner, state anthem and Romania''s coat of arms the currency was the fourth national ensign defining the country brand.
"Thanks a lot to all those who made the emergence of the hard ROL possible, which is a sign of health in the Romanian economy," the head of state said.
Premier Tariceanu tried to have the audience loosen up a bit by saying he had prepared a small poem for the occasion: "Something I thought of is coming true/ As Tariceanu and Basescu/ Today along with Isarescu/ A hard ROL will bring to you", the Prime Minister recited.
In a somewhat more sober tone of voice the NBR Governor stated the new ROL (RON) will bring the Romanian currency up to European values, worthy of the convertible currency status.
"3 RON for one dollar, 3.6 RON for one euro... These are figures that tell a lot about the inflation fighting work. We are giving back the ROL the value worth of the European currency status," Isarescu said. In his opinion, the RON sends out a pro-European message, that is the Romanian society and economy are leaving behind a time of inflation and start following a performance and competitiveness trend.
"Under the circumstances, I am not wishing the RON a long life, but a healthy life," Isarescu concluded. zf@zf.ro
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