Midday Forex: Leu moves higher vs euro after RRR cut

The benchmark exchange rate set by the National Bank of Romania fell 0.08% Tuesday to 4.2928 lei/euro, the lowest in three weeks, a day after the central bank cut the reserve requirements for fx-denominated liabilities for banks.
The leu has thus reached the highest level versus euro since October 7, when the central bank posted 4.2897 lei/euro rate at midday. Yesterday, the official rate stood at 4.2962lei/euro.

“The market has been pretty quiet today, with local currency starting to move higher since yesterday’s closing, but lost steam in midday dealings”, a dealer said.

The leu traded higher in the morning, between 4.2920 and 4.2870, after NBR’s decision to cut the reserve requirements for FX-denominated liabilities for banks, from 30% to 25%. The RRR cut will free up around €1-1.2 billion.

Later on, the exchange rates started to climb gradually to 4.2940lei/euro.

In the region, the European currency increased versus a basket of emerging currencies today. Against the polish, it went up from 4.08/euro to 4.1060/euro, while versus the Hungarian forint, it strengthened to 266/euro from 264.8.

Against the US dollar, NBR’s official exchange rate climbed on Tuesday by 0.32% to 2.8811lei/US dollar from yesterday’s 2.8719.

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