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Isarescu about the exchange rate: I cannot deny we intervened in the rate, which is obvious, but I cannot comment that we did


The National Bank of Romania intervened to defend the national currency after the leu started to depreciate on the international market following the recommendations of a big bank to sell the Romanian currency, stated on Thursday the governor of the National Bank of Romania Mugur Isarescu.

‘The leu had a slight depreciation. Now, what I tell you I shouldn’t do it, but I tell you to calm you down. When you have a higher inflation than in other two countries by 2 percentage points, on average, didn’t  you expect it? But to make such a fuss. You cover the first pages of the specialty newspapers…. Come on, let us calm down as it is nothing. It cost us a little. Any fuss costs, and that movement which was no surprise, we saw it coming, but it was dangerous, did not happen here, that is why I mentioned the international markets. It was overnight, indeed, the leu was visible, and there was, let us call it so, a recommendation of a big bank ‘ sell Romania’. They sold some bonds. So, it was not easy, I have to admit it. I cannot deny that we intervened, that is obvious, but I cannot say that we did’ Isarescu said.

Similarly, he mentioned that a depreciation of under 5% should not be interesting.

‘And if I ask the question that I was asked some days ago by a foreign diplomat ‘ what  is the matter with you?”. The market functions, the exchange rate depreciated with 1.2%. Well, 1.2% we were saying all the present here that the flexibility of the rate with a limit of 5% should not interest us. What happened with 1.2%? indeed, with all the fuss it could have gone further,and have negative effects. I don’t know who created this tension. But if I am asked in the parliament I will not say anything else but what I told you already. There is no secret. Not for the present period, not for the period 2008’ Isarescu said.

To give an evil meaning to the expression’ to negotiate’ is totally inappropriate, as in the market economy there are negotiations between the buyer and the seller, stated the governor of the National Bank of Romania, Mugur Isarescu according to whom ROBOR has become a kind of terrorist who rambles through the society and nobody catches him.

‘I can tell you something as I have heard it somewhere else, that the banks had an agreement. So, this is the misunderstanding, I am sorry that it spread across the whole Romanian society and ROBOR has become kind of terrorist who rambles through the society and nobody catches him’, Isarescu said.

He explained that in 1991 the banking and monetary reform took place in Romania and the National Bank had no contact with the clients, besides the banks which they licence. The system is called banking system at two levels.

Similarly, he explained that the interest can fluctuate on the market and following the actions of the ministry of finances. ‘Let us discuss the first 15 days of this year. There was an excess of liquidity, do you know why? So, it was not the governor, it was nobody who came and made the interests go down. The ministry of finances,  a big player. The state treasury is the biggest banker of Romania and made payments as usual, I could say slightly over what we expected, for pensions, salaries to the budget-paid employees and so on, and the banks had an excess of liquidity. They were for some days with deficit, some others with excess and they all got an excess and then we could ask, did they turn into a cartel? Yes, they did, that moment when they all got an excess they had a kind of cartel. But  how much does it count? They dropped the interest down to 1.5% and there they placed all the money in a deposit’ Isarescu said.

The BNR governor mentioned that the liquidity disappeared but not as a result of a malefic understanding.