Romania FX reserves increase
BUCHAREST (Reuters) – Romanian central bank data showed yesterday a steep rise in hard currency reserves in August, signalling that the bank may have intervened in currency markets to weaken the leu last month, analysts said. The bank said hard currency reserves, excluding some 104.7 tonnes of gold, surged -2.26 billion in August to -24.7 billion. Inflows were -2.77 billion, coming mainly from a sharp rise in prices of government bonds on international markets, reserve management revenues and changes in the minimum reserve requirement on hard currency liabilities for commercial banks. Covert intervention Local traders have said there were rumors in July and August about covert central bank intervention to curb the leu, which hit a five-year high against the euro in July at 3.0870 per euro. «It is clear from these figures that the central bank intervened in the market in August,» said Ciprian Dascalu, a senior economist at ING Bank in Bucharest. «It bought even more hard currency than in the previous month. «The moment must have been last week, when all the emerging market currencies were recovering and the leu was totally disconnected from the regional trend,» Dascalu said. July reserves data also appeared to confirm the market’s suspicion of covert intervention. The central bank declined to comment on the reserves data. Central bank outflows totalled -514.8 million, reflecting mainly rate payment and interest due on Romania’s public external debt. The bank said payments to service the public external debt until the end of the year total -325 million.
