The euro abruptly leapt to 4.2 RON yesterday afternoon on theinterbank forex market in Bucharest, gaining around 1% on the earlyday level, after foreign players bought large amounts of foreigncurrency, desperately seeking to close their RON positions.
Dealers say investors reacted strongly to the bloody events inAthens, fearing problems could spread to other countries in theregion, with the word "panic" returning to memory after a period oftime during which things appeared to be calming down.
"The big wave of foreign currency purchases came when theyannounced deaths resulting from the clashes in Athens. Theresistance level was breached, and many stoplosses were triggered(preset orders to close positions by buying foreign currency inorder to limit losses i.e.)," comments the dealer of anotherbank.
Towards the end of the day the market calmed down somewhat, withthe euro sliding towards 4.19 RON.
"The markets are very sensitive and very inflamed. Events in Greecehave brought the entire region under pressure, with the Romanianmarket no longer being considered as less correlated with itsneighbours because of talks of taxation tightening. All the talksabout tax raises have brought us in line with the region, and today(yesterday i.e.) the regional sentiment is extremely negative,"says Dorin Badea, UniCredit-Tiriac Bank treasurer.
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