It was the second month this year when the banks used the Lombard facility, after borrowing a smaller amount of RON0.1 million in January. The Lombard rate in April was 9.25% a year, well above 4% a year or less on the interbank market.
At the same time, the central bank attracted RON19.5 billion from commercial lenders in April, 36.7% lower on the month.
“The size of the amount leads us to believe this was no liquidity management error and looks more a sudden deterioration of the access to funding, probably for an important market participant,” ING said in its report.
“Such unusual events combined with a relatively foggy market picture could boost term premium,” it added.
ING said liquidity deficit has been hovering at around RON5 billion since December 2011.
Since market rates have been very low, this would suggest “a massive dormant demand for funding which was not serviced in the money market and could eventually put serious upside pressure on rates,” the report noted.
Apart from the Lombard facility, the central bank also uses repurchase agreement operations to fund commercial lenders. The bank has been injecting cash into the market every week since October last year and governor Mugur Isarescu said the extra cash target several lenders who have difficulties borrowing from their peers. (EUR1=RON4.4032)