“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.
“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.
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 national currency touched an early low of 4.502 to the euro in the first hours of trading Thursday, but it further gained ground and traded at 4.4975/4.4985 versus the euro at around 10:30 local time (GMT0830). The leu closed at 4.495 to the euro Wednesday.
The central bank Wednesday set the leu’s reference rate at 4.4979 per euro, slightly stronger than a six-month low of 4.501 per euro in the previous session.
Against the US dollar, the leu’s indicative was down to 3.3106 units, the lowest level since November 14.
On the money market Thursday morning, overnight rates were at 1%-1.2%a year.