The "hot money" of the foreign speculators on the Romanian forex and monetary market has started to leave once interests on ROL fell to half their values early in the year. At the same time, the calm on the forex market hints towards a lack of appreciation momentum on the part of the ROL.
German DePfa Bank withdrew approximately 46 million euros last month out of a total exposure of approximately 70 million euros. DePfa had gradually entered the market since 2003, when it established a special investment fund in Romania, DePfa Money Market (DMM), to speculate the high interest rates and the appreciation of the ROL. The Germans owned almost 100% in the fund''s assets, which dropped 65% last month to 25.3 million euros.
The representatives of DePfa Asset Management, the company that manages the fund did not care to comment on the huge amounts of money withdrawn last month.
The withdrawal of the German bank''s money is probably but the tip of the iceberg, seeing as many of the foreign banks or funds that have speculated the appreciation of the ROL and the high interests over the last two years preferred other methods, such as establishment of trading companies, which are organised as Romanian legal entities specifically for this purpose (special purpose vehicles), whose movements on the forex market are harder to keep track of.
Non-residents were not allowed to buy government securities in ROL or make deposits with banks until April this year. However, they managed to find a number of loopholes to bend the law, and those that wanted to speculate the interest gap were able to enter the market before the April deregulation of the capital account. The deregulation did not make any visible impact on the forex market or on the interest rates for this reason, as the National Bank of Romania had feared.
Another fear of the NBR, the pressures on the exchange rate created by the exit of the "hot money", again does not seem to materialise. The money withdrawn by the Germans alone is worth about half of what is trading on the forex market daily, where the ROL had an extremely stable performance last month.
The shares of the fund established by DePfa have witnessed growth of some 14% in ROL over the last 12 months, a yield matching banking interests for the period. Euro would exchange for 40,500 ROL about a year ago, and the rate is now fluctuating around 36,150 ROL, which has doubled the gains of those who do their calculations in euros. DePfa has gained nearly 30% in euros over the last twelve months. The interest on euros on the international markets reaches 2-3%, while yields of 30% on the Western market are only possible if one takes very high risks on the stock markets. The risk/gain ratio of the placements in government securities in ROL seems less and less favourable for a foreign investor. The quite plausible scenario of the ROL''s depreciation by 8% to 39,000 ROL over the next 12 months would practically mean 0% gain from investments in Romanian government securities for a foreign bank, whereas they yield a 7-8% interest in ROL a year. vlad.nicolaescu@zf.ro
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