“In a normal situation, (freed funds after the minimum reserve ratio cut) should lead to a depreciation of the leu, but I’m afraid it won’t happen,” Isarescu told a press briefing to present the first monetary policy decisions of 2014.
Wednesday, the central bank cut the key monetary policy rate by 25 basis points to a record low of 3.75%. At the same time, the bank lowered the minimum reserve requirement ratios to 12% from 15% for the leu-denominated liabilities, and to 18% from 20% for the foreign-currency liabilities.
The governor said the central bank will release EUR500 million and RON4 billion to commercial lenders, following the minimum reserve requirement changes.
He said the leu depreciation in the past weeks is not significant. The leu is currently traded around 4.5 against the euro, from 4.45 mid-December.
“Between 4.4 and 4.5 it is a 2% variation margin, much lower than an equilibrium area of 5%,” said Isarescu, adding the central bank will have a more lax policy regarding the leu’s variation.