The leu headed for its strongest level in two months after the Romanian central bank extended a cap on repo funding to an eighth consecutive week and as easing of terms on emergency aid for Greece boosted risk appetite.
The leu appreciated 0.3 percent to 4.5053 by 5:10 p.m. in Bucharest to the strongest on a closing basis since Sept. 19, gaining for a third day. Yields on 2019 Eurobonds fell two basis points, or 0.02 percentage point to 4.78 percent, according to data compiled by Bloomberg.
The Banca Nationala a Romania capped lending at 4 billion lei ($1.1 billion) in a repurchase agreements auction yesterday, extending its limit on weekly funding for lenders introduced on Oct. 8. European finance ministers cut the rates on Greece’s bailout loans, suspended interest payments for a decade, giving the nation more time to repay, and engineered a Greek bond buyback. The country was also cleared to receive a 34.4 billion- euro ($44.7 billion) loan installment in December.
“As international markets saw some relief due to the news related to the Greek bailout, the leu strengthened against the euro,” analysts including Mihaela Neagu at OTP Bank Romania SA wrote in a note today. “The appreciation continues to be supported by the tightening of liquidity.”
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