The foreign currency inflows in the amount of hundreds of millions of euros during the Hidroelectrica IPO "are set to add pressure in the coming weeks to the local currency market," according to a Bloomberg report that also notes the National Bank of Romania (BNR) traditionally keeping the exchange rate under a "controlled floating" regime.

The leu (RON) will probably see inflows when foreign investors exchange funds to buy local shares in power producer Hidroelectrica, whose offering is estimated at as much as RON8.7bn (EUR 1.7bn) and is expected to close on July 4.

The BNR will probably intervene to temper the appreciation and keep the leu stable below or close to RON 5 against the euro this year, according to analysts mentioned by Bloomberg. 

"It is reasonable to assume that of the more than EUR 1bn estimated as inflows from institutional investors, a large part will be fresh money on the Romanian market," says Valentin Tataru, ING Bank Romania chief economist.

Fondul Proprietatea, managed by Franklin Templeton Investments, is trying to sell on the Bucharest Stock Exchange about 17.3% of its 20% stake in Hidroelectrica. Most of the stake is offered to institutional investors and only 15% to retail investors. 

(Photo: Andranik Hakobyan/ Dreamstime)

iulian@romania-insider.com