“We’re sensing a certain level of frustration from clients regarding the evolution of interest rates on bank deposits. People were used to high interest rates, but these have fallen substantially in the recent period,” Dan Popovici told a news conference.
He said investment funds represent a good alternative to bank deposits.
“The longer the interest rates on deposits stay at these levels, the more investors will turn their attention to higher risk assets, as they’d want to get out of their comfort zone,” Popovici said.
The asset management company’s chief estimates the Romanian leu will appreciate slightly or remain stable against the euro in 2014, while interbank interest rates are project to vary very little.
The leu strengthened around 1% versus the euro in the last week, despite a negative sentiment in the region, and market participants believe the central bank has stepped in to protect the national currency. The interventions also affected interbank rates, which rose above the central bank’s key lending rate for the first time in approximately six months.
“Considering the events in the past days, I don’t think the central bank will further lower its main interest rate at the monetary policy meeting,” Popovici said.
The central bank last month cut its key lending rate by 25 basis points to an all-time low of 3.75%, while lowering the minimum reserve requirements to 12% for leu-denominated liabilities and to 18% for foreign currency liabilities. Many analysts expect a new 25 bps cut on Tuesday.
Founded in 2007, OTP Asset Management runs eight open-end investment funds in Romania. The company, a unit of Hungary’s largest bank OTP, on Monday launched a new US dollar-denominated bond fund on the local market.