* Analysts are predicting a smaller fluctuation of the leu after the decision of the Constitutional Court
The leu yesterday depreciated against the Euro, after gaining for four consecutive sessions. The national currency fell almost continuously over the course of last month, as well as in the first days of this month, amid the political tensions. The trend reversed on August 6th, when the National Bank of Romania (NBR) announced it would cap the amounts it would lend to banks in repo operations at six billion lei. On that day, the exchange rate fell to 4.5740 lei/euro, more than seven bani below the amount recorded during the previous sessions. The drop continued for more than three sessions, with the Euro trading at 4.5362 lei on August 3rd. On the next session there was a slight rise, and then on August 13th, when the NBR announced another capping of the amounts lend in repo operations, to 5 billion lei, the exchange rate fell by almost 1 ban, to 4.5307 lei/Euro. The downward trend has remained in place for the entire week.
Yesterday the third consecutive repo cap was implemented. The Central Bank only offered lenders four billion lei, even though demand was more than three times greater. In spite of that, the leu no longer gained against the Euro.
* Aurelian Dochia: The NBR is faced with a compromise
The NBR is currently faced with a compromise, economic analyst Aurelian Dochia considers. The policy of the Central Bank to cap the amounts offered on repo has stabilized the exchange rate, but at the same time could lead to a significant increase in interest rates, which would affect the financing of the budget deficit, he explained. "The NBR is fighting on two fronts and it can't win on both. There is an interest in showing that the volatility of the exchange rate is not that big, but on the other hand, if the interest rate will continue to
