NBR absorbs 8.9bn-euros in January

The NBR (National Bank of Romania) absorbed overall deposits worth 33.12 billion RON (8.9 billion euros) in January – a historic high, in an attempt to keep a tight rein on liquidity. Under the circumstances, the average daily value of deposits peaked at 10 billion-RON, up 51% against December. The central bank organised no less than 17 purging operations last month, with each carrying an annual interest rate of 8% (the level set for the monetary policy at the time). The NBR Governor, Mugur Isarescu, has repeatedly stated that the liquidity level on the interbank market was shaken by the extremely high sums spent at the end of last year by the public authorities. The budgetary expenditures in November and December were more than 3% higher than planned. This led to the state budget moving from a slight surplus in October, to a deficit estimated at 2.7% of the GDP at the end of December. Isarescu said the high level of excess liquidity, which led to a decline in interest rates, put additional pressure on the depreciation of the exchange rate. In order to absorb all the excess RON on the monetary market, the NBR organised two auctions a day to attract deposits. At the same time, the NBR made its purging policy more flexible. In addition to classical deposits, with a two-week maturity, the NBR also attracted deposits with various maturities (ranging from three to seven days) in an attempt to offer placement solutions that matched the needs of commercial banks.