June 18, 2020 / 9:45 AM / 14 days ago

Romanian cenbank says will ensure liquidity, eyes exchange rate

BUCHAREST, June 18 (Reuters) - Romania’s central bank will continue to ensure market liquidity while keeping the exchange rate relatively stable and gradually lowering interest rates without discouraging domestic savings, Governor Mugur Isarescu said on Thursday.

The bank cut its interest rate by a quarter point to 1.75% in May and pledged to continue injecting liquidity via repo transactions and secondary market debt purchases to curb the economic fallout from the new coronavirus outbreak.

Isarescu said in a statement the bank has bought 3.8 billion lei worth of treasuries from the secondary market by June 5, while the daily average stock of bilateral repo transactions was roughly 7 billion lei during May 15-June 15.

“Romanian interest rates, still higher compared with the Czech Republic, Hungary and Poland are a consequence and not a cause of Romania’s economic situation: twin deficits, the EU’s highest fiscal deficit from the start of the pandemic crisis and ... high financing needs,” the statement said. (Reporting by Luiza Ilie)

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