RON and BSE follow regional downward trend

The euro continued to grow against the RON, for the second day in a row on the Bucharest forex market, up to a peak of 3.15 RON. Speculative moves on the Eastern Europe forex markets once again coincided with plunges on the regional markets, as it has happened several times in the past few years. Foreign speculators bought significant amounts of foreign currency yesterday, both euros and dollars. It started with massive closings of positions operated by hedging funds on the Turkish market, whereas the neighbouring currencies were caught in the turmoil. In only two days, the euro gained more than 1% in Bucharest, from 3.12 to 3.15 RON, with high volumes being traded. Local banks are now trying to cope with the high volatility, following a period of RON appreciation triggered by a positive regional context. In the past three days, stock markets in the region took a 3.4% nosedive, according to the CECE index calculated by the Vienna Stock Exchange. The Bucharest and Budapest markets sustained the heaviest losses – more than 5% in this interval. The BSE posted the steepest decline on Wednesday, when shares lost 3-4%, which brokers attributed to the 1.6% tumble that had occurred in the US the day before (the biggest loss of the past five months).