Until 2000, the National Bank of Romania (NBR) would mainly invest its reserve into bonds issued by U.S. government agencies. However, their share in NBR's investments has plunged ever since, as the central bank has steered towards euro-denominated bonds. In fact, the single European currency is also gaining ground in the foreign exchange reserve.
At the end of 2000, the bonds issued by the U.S. government agencies accounted for 53% of the National Bank's portfolio. In absolute value, NBR had 1.97bn dollars in these bonds. One year later, the portfolio had increased to $3.2bn, but the share of American bonds had dropped to 22%.
The declining trend continued in 2002, with their share having plunged to 16% by yearend. The biggest slump occurred in the first months of this year, when the U.S. government bonds came to account for only 1.2% of NBR's total portfolio, which had climbed to an equivalent of $5.3 billion.
"The share held by the U.S. government securities in NBR's total portfolio has dropped, as this category of assets has lost some of its appeal since 2000," Lia Tase, head of the central bank's division of market operations told Ziarul Financiar. Lia Tase also oversees the management of NBR's foreign currency reserve.
According to the central bank's 2001 annual report, these investments were made with U.S. government agencies Freddie Mac and Fannie Mae, the two mortgage finance giants.
Freddie Mac was embroiled in a resounding scandal this spring, triggered by the announcement of accounting irregularities. Several top officials were fired, while the price of Freddie Mac bonds plunged. There were also reports that the European Central Bank had advised the national central banks in the eurozone to sell all of their Freddie Mac debt from their foreign exchange reserves.
The National Bank of Romania says its decision to cut back on the share of these instruments in its portfolio has nothing to do with the international scandal. The central bank's officials say the securities had merely reached maturity and NBR did not buy more because the rates were too low.
"The bonds simply reached maturity and we did not renew them," said NBR vice-governor Cristian Popa.
At the end of June, the National Bank of Romania's foreign exchange reserve amounted to $6.2 billion, with bonds accounting for 86% of this amount.
cristian.hostiuc@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
