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August 15, 2022
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BNR’s Isarescu: We are interested in keeping inflation under control

Romania’s national currency, the leu (ROL), has strengthened against the euro, and that is a summer trend, which is based on the foreign exchange sales of grain traders, Governor of the National Bank of Romania (BNR) Mugur Isarescu explained on Monday at a news conference to release the BNR inflation report.

“The forecasts are made in the market and analysts have every right to make such forecasts. As you can see, the leu has strengthened a bit. It has not depreciated, it has strengthened. It is true that that is a summer trend. Bumper grain harvest: traders come, buy directly from the field, as I understood, and they sell foreign currency to buy with the local currency. Then the offer increased. Then, Romanians also came from abroad on Saint Mary’s Day. At the exchange offices, if you go right here on the street, their exchange rates, which were usually above the exchange rates of the National Bank, are now below the exchange rates of the National Bank. I don’t know how transient this assessment is, but you can see how much risk those who make predictions like the euro will reach 5 lei tomorrow or the day after tomorrow. We are interested in keeping inflation under control and that says a lot in terms of controlling liquidity and the impact of that control on the developments in the money market and the foreign exchange market. We are trying to keep the equilibria in place,” said Isarescu when asked about the recent developments in the exchange rates of the local currency.

The national currency appreciated on Monday against the euro, which was calculated by the National Bank of Romania (BNR) at 4.9131 lei, down by 0.14 bani (-0.03%) from the previous quotation of 4.9145 lei.

On July 14, 2021, the national currency reached 4.9283 units to the euro.

 

We’ve never competed with Finance Ministry, we’re careful at liquidity absorption

 

The National Bank of Romania (BNR) has never competed with the Ministry of Public Finance (MFP) and has been very careful about liquidity absorption, leaving enough money in the market to finance itself, the central bank’s Governor Mugur Isarescu said on Monday at the conference to present the Inflation Report.

“We have never competed with the Ministry of Finance. We have been very careful about liquidity absorption and have left enough money in the market to be financed under the given conditions. The conditions are not only established by the National Bank, the conditions under which the Ministry of Finance is financed, as the interest rates at which it borrows on the international market have a multitude of other components, other determinants. Let us have a credible policy, because then we help the Finance Ministry to borrow at reasonable interest rates on the international market, the way you have often mentioned,” said Mugur Isarescu, when asked about BNR’s operations in the money market under conditions where MFP is under pressure that it has covered only 60 pct of its financing needs.

He also said that it is the commercial banks that provide liquidity and here the negotiation is a market negotiation, with many components.

“We didn’t compete with them. I mean, we didn’t go to get all their liquidity to cause them problems. Under no circumstances, and in fact they have been funded, let’s be reasonable and rational. If you look at their yields, they have continued to fall significantly up to a certain point, but interest rates in the market are not taken out of the hat,” Mugur Isarescu added.

 

Compiled from Agerpres

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