Romanians find sudden appetite for euros, rush to sell dollars

Was it a mere coincidence? No one can know for sure. But it is certain that, immediately after the National Bank of Romania Governor Mugur Isarescu last week announced the switch to the euro, the population and the companies rushed to the exchange offices to sell dollars and buy euros. The main retail banks reported significantly more transactions conducted through the exchange offices in the weekend, mainly aimed at selling dollars. Things were roughly the same at the non-banking exchange offices, which, however, did not have so many euros to sell.
Whereas on a typical day transactions through the banking exchange offices amount to 6-8 million dollars, they soared to 12-14 million dollars in the weekend.
“Last week’s announcement about making the euro into the benchmark currency for the ROL has made our clients (mostly the legal persons) rather nervous. In the days that followed, we recorded significant increases in the number of the transactions concluded through the exchange offices (in some cases they even doubled). We bought tonnes of dollars and sold euros,” Claudiu Cercel, head of BRD-SocGen’s market operations division told Ziarul Financiar.
Raiffeisen Bank noted a similar situation at its exchange offices. “We have also sold dollars and bought euros and the volume of transactions soared. However, I think this was triggered by a speculation instinct. At any rate, speculations aren’t always lucky. For instance, whoever bought euros from us last Thursday, paid 36,000 ROL/EUR, but we had already cut the price to 35,800 ROL/EUR by Friday. So they lost 200 ROL/EUR in a single day. I believe that ROL savings are the wisest solution during this time of big fluctuations,” says Cristian Sporis, chief dealer at Raiffeisen Bank.
Banca Comerciala RomA„sna (Romanian Commercial Bank – BCR), the largest bank in the system, did not face a significant increase in the demand for euros, but dollar sales amounted to several million dollars.
“We are buying around five million dollars daily, but we cannot say the same about euro sales. We believe that people are exchanging dollars into ROL, because the domestic currency savings are much more profitable now,” said the BCR arbitrageur, Adrian PA„srvulescu.
This sudden appetite for euros has certainly originated in last year’s 25% leap of the ROL/EUR exchange rate (which grew 1.9% in 2003), but also in the NBR Governor’s statements.
Isarescu last week said he did not mean to scare those that saved their money in dollars, but mentioned that the ROL/USD exchange rate could go below 33,000 ROL in case of the 2002 history repeating.