Although half of the headline inflation, the deposit interest rates rose in Romania significantly - at a level that encouraged both households and companies to place more of their money, according to the latest data published by the National Bank of Romania (BNR).

Thus, the stock of term deposits held by households at the end of October rose by 4.0% compared to the end of September - nearly four times faster than the total amount of money held by households in banks (the sight deposits contracted by 1.1% mom).

The annual advance of the term deposits is only 8.5% YoY, but still nearly twice the advance of the households’ bank money (sight depositors edged up by a mere 1.9% YoY).

When it comes to currency, the households’ local currency deposits rose by 5% in October (versus September) and by 14.5% YoY.

Banks pay up to 10% interest rates (TBI bank, for 5-month and 5-year deposits), with the highest rates paid by major banks up to 8%. For comparison, the Treasury pays-taxable interest of some 9% (9.16% for 2-year maturity) to households.

The headline inflation hit 16% YoY and will remain in the double-digit region over the next 12 months.

The Romanian companies began accumulating term deposits earlier, and their stock marked an impressive advance of nearly 40% YoY (after a marginal 1.7% mom advance in October). Overall, companies' bank deposits rose by only 12% YoY (sight deposits edged up by only 1.2% YoY).

iulian@romania-insider.com

(Photo source: Dreamstime.com)