The start of the year brought an unexpected breath of fresh airfor the interbank market, with the RON strengthening to 4.17RON/EUR, the best level achieved since last spring, while bankslowered the interest rates they charged for loans to each other,and the risk premium charged abroad to insure Romanian bonds hasgone down, reflecting a better perception of the Romanian economyby foreign players.
However, the economy is still in need of substantial funding atlower costs to be able to come out of the worst recession after1989. For now, bankers have their reservations and say more stepsare needed to unfreeze lending in RON, despite the signal sent bythe NBR at the beginning of the week with the cut in the key rateby half a percentage point to 7.5% per annum.
"The start of the year was better in terms of volume than thefourth quarter of 2009. We saw more interest from foreign players.I think the first part of the year will be good for the RON and Iexpect to see the euro trading at as little as 4 RON," commentedthe dealer of a bank in Bucharest.
Interests on the interbank market have gone down quite a lot, tomeet with NBR's key rate, at 7% to 8% a year, from 9-10% only daysago. Bankers, however, warn that cash injections will be neededsoon if the NBR wants to keep interest rates low, given that theFinance Ministry continues to aggressively absorb funds to coverthe huge budget deficit.
Good news came from international markets, as well, where therisk premium for insuring Romanian bonds (as reflected in thecredit default swap quotes) fell to the levels before the politicalcrisis that started at the end of September. This means local bankscan get cheaper money from abroad, which translates into lowerinterests on loans in euros granted to clients.
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