ING: NBR spent one billion euros to keep euro exchange rate in check in May

The National Bank spent 0.5 to 1 billion euros of the foreign reserve in May alone in order to keep the exchange rate nailed to 4.1-4.2 RON/EUR, as the international financial markets were shaken by the financial storm originating in Greece. This is the conclusion of ING Bank analysts, who say that the price of the interventions might show in form of a higher volatility of the RON interest rates over the coming months, which have already gone up from 2-3% a year to 6-7% in the last few weeks.

“Judging by historical standards, such a high volume of the interventions on the forex market reveals heavy pressures for the depreciation of the RON and that probably there is no more excess liquidity on the monetary market. Considering that banks probably bet on the depreciation of the RON, we expect a significant volatility of interest rates soon, given that the NBR has demonstrated it prefers exchange rate stability,” says Nicolae Alexandru-Chidesciuc, ING Bank’s chief economist.

NBR on Tuesday announced that the foreign reserve had gone down by almost 400 million euros in May, to 31.9 billion euros.