"One can resist an intrusion of armies but not an idea whose time has come." - Victor Hugo

FOREX MARKET
The rally of the euro eased slightly on Monday, as the market lacked new incentives to commit to further euro purchases. Therefore, the EUR/USD tested the 1.2880 resistance level, which could not be broken. Afterwards the pair reversed its move and dropped until 1.2800 zone in the American forex session. On November 14th, the pair is oscillating in a tight range between 1.2800-1.2840. Later, players will be watching US PPI and Retail Sales figures, however we do not expect them to be market movers.
On November 14th, the Romanian National Bank released its quarterly report on inflation during a news conference. NBR 's governor underlined that the fast evolution of disinflation process in Romania exceeded all expectations and this was determined by tight monetary and fiscal policies, as well as by slower dynamics of volatile and administrated prices. Although Romania's government decided that the administrated hikes projected for next year should be applied in the last two months of 2006, these measures will not affect the inflation target. NBS's governor estimated the influence of these measures to 0.5% to the CPI and revised to downwards the end-year inflation for 2006 to 4.7%, below the 5% mid-point inflation target. NBR maintained unchanged their inflation targets for the next two years to 4% in 2007 and 3.8% in 2008, although they seriously consider the high inflationary risks induced by Romaniaрs accession to EU. NBR's governor signaled a possible relaxation of the monetary policy next year, but this will begin by reducing the minimum required reserve ratio, while a rate cut is not taken into consideration in the next months.
On November 13th, the Romanian currency moved in narrow levels, consolidating its recent position, same as other emerging currencies with whom RON is highly correlated lately. The EUR/RON ranged no more than 50 pips yesterday amid modest traded volumes. On Tuesday, the domestic market opened at 3.5050 level which seems quite well offered as the bids oscillated less than 30 pips until noon time, as the single currency found strong support at the same 3.5020 level.

MONEY MARKET
The overnight deposits stood steady in the 8.5-9.1% zone on Tuesday. NBR held its common one-month deposit auction on Monday through which it sterilized RON 1.56bln at the fixed 8.75% policy rate.