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Short-term lending to be extended when interest rates are high

The Finances Ministry should issue government bonds with shorter maturity in the next five or six months, until inflation becomes more predictable, National Bank of Romania (BNR) governor Mugur Isarescu said.

'The inflation development will be more predictable in a few months and then the interest rates will become more predictable too', Isarescu told debates on The Money Policy: Developments and Challenges staged by the central bank. Director of the BRD-Societe Generale bank's Financial Markets Department Claudiu Cercel, who also attended the event, stressed that the banks, amid low liquidity and anticipated lending increase, prefer to keep their liquidity, the more so since the government bonds may record drops. Cercel also pointed out that the banks favour the euro borrowing, since they can be re-financed easier by the shareholders, with the re-financing operations in the local market being more difficult, the Ziarul financiar daily reports. Since the domestic re-financing market offers but weak support, the banks choose re-financing from the shareholders, from the parent banks. Furthermore, the euro-leu swap market, which might provide liquidity in the national leu currency, is limited. On the other hand, leu liquidity is highly volatile due to the BNR interventions, but also due to the difficulty in anticipating the State Treasury's liquidity. Stefan Nanu, director of the Finances Ministry's Treasury Department, announced the state would carry out active liquidity management in the period ahead; he stressed it is possible that the experience from last April repeat in this April as well, explaining that at that time the interest rates had grown very much, with the reserve period overlapping the payments to the budget. Sursa: http://www.rompress.ro

Tags: interest rates liquidity euro bnr brd

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