The 3-month ROBOR (ROBOR 3M), the interest rate index used as a reference for most RON-denominated loans, hiked to 3.13% (per year), the highest level since May 2014, according to Romania’s National Bank (BNR).

The ROBOR rose to 3.09% on Friday (June 22), after strongly accelerating since April 13, when it stood at 2.07%. Meanwhile, the 6-month ROBOR increased to 3.20%, the highest level since May 15, 2014.

Market liquidity is weakening, say local economists, pushing up interest rates.

“The major factor behind liquidity narrowing is probably the BNR’s intervention in the FX market”, according to ING Bank economists Ciprian Dascălu and Valentin Tătaru, quoted by Profit.ro. They estimate that the central bank has sold EUR 1.5 bln from its FX reserve.

Moreover, tax payments to the state budget are due on June 25, likely triggering a liquidity gap that might persist by end-November, they added.

Another factor affecting market liquidity in the following weeks will be represented by over RON 3 billion dividend payments scheduled by state companies, according to ING.

At the same time, BCR economists estimate the BNR FX market intervention at about EUR 1.0 billion and see the 3-month ROBOR at 3.0% at yearend.

BNR increased the monetary policy rate to 2.5% from 2.25% on May 7, for the third time this year. Still, interest rates on the money market have been rising strongly since last autumn, fueled by higher inflation and falling market liquidity.

editor@romania-insider.com