WITH ITS RESERVES DEPLETED, Băsescu: The NBR can no longer keep the exchange rate in check

• The leu, at a record low against the Euro - 4.6397 lei/Euro

The leu continued its decline against the Euro yesterday. The NBR bani against exchange rate of 4.6397 lei/Euro, up 3.88 bani compared to the previous session.

On the interbank market, the leu has depreciated to 4.6500 lei/Euro, setting a new record.

Prime Minister Victor Ponta yesterday said that after the referendum the leu would start gaining against the Euro: "After July 29th, when the referendum takes place, following the political stability which we will show, the leu will recover and the exchange rate will gain".

Suspended president Traian Băsescu does not share that opinion, and he said that the statements of the prime-minister are "naïve", because the NBR no longer has any resources to stabilize the exchange rate, as the forex reserves are close to the lower threshold, according to Mediafax.

He explained: "Only a naïve person could say that < the leu will recover overnight >. No, it will be very hard for the leu to return to where it was when Ponta received his appointment as prime minister, because the exchange rate, as you well know, has a very high component of trust. About 60-70% of the stability of the exchange rate comes from political stability. We won't go back, but at least we will stop the depreciation".

The Central Bank can't control the depreciation of the leu against the Euro, because the NBR needs political stability for its interventions to be efficient, according to Traian Băsescu.

The suspended president said: "Not even the National Bank has the huge resources needed to intervene on the market to keep the exchange rate at an acceptable level, because we are nearing the limit below which we can't go, of the reserves of the NBR. The National Bank needs to wait for a moment of respite, with a good outlook for political stability, so it can make those interventions effective, anything else is pointless".

In the beginning of the week, interim president Crin Antonescu said that he met with NBR governor Mugur Isărescu, so he can get "a very good understanding" of the relationship between the exchange rate and the exchange rate and on the statements he needs to make to influence the economic developments in a positive manner.

He said he is convinced that things will "settle down", after the referendum, but "only in one of the two alternatives".

The leu/euro exchange rate opened the interbank exchange rate at 4.6370 - 4.6400 lei/euro, similar to the close prices of the previous day. The exchange rate later climbed at 4.6460 lei/euro, but for a short while, the quote fell to 4.6275 - 4.6300 lei/euro, following a possible indirect intervention of the NBR or due to profit taking by some players from London, which bet on the depreciation of the leu, according to dealers.

Towards mid-session, the quotation once again rose above 4.64 lei/euro, and after the NBR announced the reference rate, the exchange rate reached a new high, of 4.65 lei/euro.

Around 17:00, trading was taking place around 4.6275 - 4.6300 lei/euro, down almost one ban compared to the same time of the previous trading session, from 4.6370 - 4.6400 lei/euro.

Compared to the American dollar, the leu lost 3.44 bani yesterday, reaching a new record of 3.8343 lei/dollar.

The leu/Swiss Franc exchange rate yesterday climbed from 3.8314 lei/franc, to 3.8630 lei/franc, reaching a new high of the last 11 months. The only time the official exchange rate for the Swiss Franc was on August 12th, 2011 (3.8926 lei).

Since the beginning of this month, that is since the beginning of the political crisis, the leu lost 4.27% against the Euro, and in relation to the American dollar, it lost 3.62%. Over the same period, the leu depreciated heavily against the Swiss Franc (9.71%).

Very short term interest rates rose yesterday, compared to the previous session, rising above the policy rate of the NBR, of 5.25% a year, due to the fact that the commercial banks have begun setting up the minimum mandatory reserves demanded by the Central Bank in the new reserve period, which began yesterday.

In the first part of the day, the NBR posted an average interest rate for overnight attracted deposits (ROBID) of 4.80% per annum, compared to 0.91% in the previous session, and the interest for overnight placed deposits (ROBOR), reached 5.29% per annum, from 1.38% in the previous session.