"If you do your best, don't mind the rest." - Irish Proverb

FOREX MARKET
On Tuesday, the greenback lost some of its recent gains to the euro, after the US New Home Sales dropped to the lowest level since June 2000 and fueled expectations that the Fed would lower rates in the second semester. Currently, the EUR/USD is traded in the 1.3330-1.3340 zone, but seems to lack steam as investors refrain from opening fresh positions ahead of Bernanke's congressional testimony on Wednesday.
On Monday, the Romanian forex market opened in the 3.3600 zone, but gradually the selling orders intensified and pushed the bids down to 3.3550 zone. At this level, the buyers appeared and took the single currency up to 3.3650 zone towards closing time. The traded volumes were rather modest, as foreign players hesitated to take new positions ahead of Central Bank's monetary meeting. On March 27th, the single currency was bided at 3.3670 level at the opening of domestic trade. RON was easily hurt by NBR's rate cut, as the pair was traded even below 3.3600 zone today.

MONEY MARKET
On March 26th meeting, the National Bank of Romania diminished its monetary policy rate by 50 bps to 7.5%, after a 75 bps cut the month before, taking by surprise most of the market watchers. Analysts had expected that NBR would wait several months to fully weight in the effects on inflation of the previous cut, before rushing to further easing of the monetary policy. To our greatest surprise, the statement of BNR's Board becomes more hawkish as the monetary policy eases down, as they underlined that: "The NBR will vigilantly monitor developments in macroeconomic indicators", when in fact their acts prove the contrary. Considering NBR's statement, they seem to be luring with sustainable disinflation process and slower dynamic of nongovernmental credit growth in the first two months of the year on back of favourable conjuncture which does not guaranty the same performance in the remaining of 2007, the more so as the monetary conditions lighted steeply lately. NBR confirmed once more that their main concern is the exchange rate stability, rather than consolidation of disinflation process. However, RON's recent rally to a four-year high against the euro, was rather induced by the scarce liquidity conditions driven by the extremely high mandatory reserve ratios in the last days of reserve period and the frequent draining of the Minster of Finance.
On March 27th, the overnight maturities are traded at 6.5/7.5% bids/asks, as interbank market quickly repositioned after yesterday's rate cut. On Monday, the National Bank drained back the 2 billion RON which matured the same day, at the 8% rate.