Regarding the recent initiatives to reduce social contributions and/or public sector wages, the IMF mission chief Jeffrey Franks said the government has limited fiscal space to take such measures while maintaining the initial fiscal target.
As last week saw the completion of the minimum reserve requirement period, short-term interest rates increased, yet they maintained significantly lower versus monetary policy rate.
For the first time this month, the Ministry of Finance borrowed amounts that were not higher than intended. As officially it was announced that the fiscal reserves have been completed (as agreed with the IMF), we have said before that rising more funds than planned from the market wouldn’t be justified, costly wise.
Leu continued to diverge from regional movements, this time strengthening against the euro from 4.3850 to around 4.3700. While offshore counterparties continued to stay on the bid side (more often due to commercial flows), traders suspected the central bank to be persistently on the offer side, yet not aggressively so.
Despite worse economic data for Europe and China, euro closed higher versus dollar last week, at 1.3265.

Catalina Molnar
 
Senior Economist
RBS Bank (Romania) S.A.