Leu's Appreciation In April Brought Higher Volume Of Interbank Transactions

05.25.2011 ZF English

The appreciation of the Romanian leu in April, when the local currency hit the year's peak against the euro, has rekindled interest from foreign players for investments in lei, and this was reflected in the volume of operations.

The daily average of transactions on the interbank forex market climbed to EUR1.7 billion in April, from EUR 1.5 billion in March, according to data from BNR, the Romanian central bank.

In April, the leu has reach a 12-month peak, strenghtening to RON4.07 per euro on the interbank market.

"There have been quite significant amounts that went into government securities," says the treasurer of a local bank. Later, the leu lost ground, especially amid rising tension on the international market due to Greece's financial situation, with the euro trading above RON4.1 in May.

Foreigners can make easy profits from investing on the Romanian market, considering that they can borrow in lei from the monetary market at interests of 4% to 5% a year, and then invest the money in government securities at yields of 6% to 7% a year. If the leu strengthens, their profits are even higher.

The Romanian currency recorded an almost 5% rise against the euro when it peaked at the end of April compared with the end of last year.