Rising dollar leaves bank interests behind

Natural persons have lately confronted with serious problems related to the ways of placing their savings, which are decreasing at any rate, as bank deposits, which used to be the most profitable placement, are currently the worst solution, bank dealers consider.

The fact that, over the past couple of months we have witnessed real negative interests, following banks’ incapacity to cover inflation, made most people become more and more interested in dollars, the American currency becoming in this period the safest choice for population’s savings.

“It was only natural for bank deposits and mutual funds to remain the last alternatives for people’s savings, as long as we have lately witnessed a leu/dollar exchange rate increase by 40-50 lei daily. People are very cautious and, though authorities keep saying that the most profitable placements are those in lei, the population is not very easy to convince,” a dealer said.

For instance, natural persons having decided to exchange lei for dollars in August have so far earned 2.78%, against 2.58%, which they would have earned out of a bank placement after a month.

Moreover, if they had decided to open a one-month dollar deposit in a bank, their profit would have been 0.5% higher. Foreign currency bank deposits at the end of May amounted to 2.65 billion dollars, 90 million dollars higher than the previous month.

Bank interests’ decrease is starting to generate a reorientation of population’s placements toward governmental bonds that offer higher interest rates.

Sources within the Ministry of Finances told Ziarul Financiar that, over the first three weeks of the current month, people bought government bonds worth 1,745 billion lei, almost 75 billion lei higher than over the same period of July.

“These are the highest interests on the market. As a matter of fact, no other bank can offer people more than 40% for three months,” the same sources stated.

“In my opinion, this situation will last until after budget rectification, which will generate interests’ increase. The inflation target announced at the beginning of the year has been given up, therefore the first estimates indicate that in August and September inflation will attain a 3% level monthly,” said Dragos Iliescu, a dealer at UGBI Bank Romania.

Iliescu pointed out that this summer’s drought, oil price increase at an international level, as well as euro’s depreciation against the dollar have had direct effects on Romania’s domestic market, too.

These effects can currently be noticed in the depreciation of the domestic currency against the dollar.