Greenspan's estimates send dollar higher, euro slips to two-month low

The US dollar yesterday climbed to the last two months’ record-high against the single European currency (1.1125 USD/EUR), following an optimistic assessment of the American economy prospects by Alan Greenspan, Federal Reserve chairman. The change soon reached Bucharest, where, after an extremely animated session, the dollar gained 173 ROL, while the euro lost 335 ROL.

During yesterday’s session, the single European currency revolved around 1.1125-1.1175 dollars, with the 1.12 threshold exceeded since Tuesday night.

The dollar’s surge was also due, besides Greenspan’s statements, to the upbeat quarterly results released in the past few days by a number of American companies, revived consumer confidence and optimistic prospects for the US industry.

According to international press agencies, Alan Greenspan said he was ready to keep rates low for a considerable period of time, aiming to boost the economy and avoid dangerous price drops. The Fed has cut rates to the lowest levels applied in the last 45 years.

Some analysts believe the US currency was supported by the unexpected decision of Canada’s central bank to cut rates, but also by the intervention of the Japanese authorities, aiming to put a damper on the yen’s appreciation, to boost the operations of local exporters.

The Bucharest forex market had an unforgettable session yesterday, as the Sell orders revolved around 100-130 million euros, entitling dealers to expect the central bank’s intervention.

Dealers had different opinions about a National Bank intervention, as the euro’s dive (more than 300 ROL) had a significant psychological impact.

The National Bank calculated an exchange rate of 36,700 ROL for one euro, down from yesterday’s 37,035 ROL, although quotations dropped more than 500 ROL on the forex market. Whereas the euro was worth 37,015/37,045 ROL on Tuesday evening, the last deals were closed for 36,520/36,550 ROL yesterday.

“A possible intervention from the central bank was indeed expected yesterday. Prices were rather stable half an hour before the official exchange rate was calculated, but then, when market players realised there was no time left for an intervention, they rushed to sell and prices dived to 36,530/36,570 ROL/euro just before the session’s closing. Although the ROL/EUR rate used to be almost mathematically linked to the USD/EUR, the market pushed the exchange rate much lower this time,” said Cristian Ditescu, senior dealer at ABN Amro Bank Romania. 
oana.nuta@zf.ro