"The real act of discovery is not in finding new lands, but in seeing with new eyes." - Marcel Proust

FOREX MARKET
Romania's consolidated fiscal budget reported a deficit of 0.12% of the whole year projected GDP in the first quarter of 2007. For 2007, the Finance and Economy Minister maintained the budget deficit to 2.8% of GDP, although by now Romania lacks major structural projects, therefore it is likely that the funds would be spent on consumption-related projects.
On Monday, the single currency was quoted at 3.3080/3.3120 bids/asks same as previous trading day's closing. Shortly after, the selling pressure prevailed and pushed EUR/RON until 3.3150 area in the first hour of trading. Around noontime, the pair stabilized in the 3.3100 zone amid thin domestic trading, as the foreign players stayed off the emerging markets yesterday.
On May 8th, the local market opened in the 3.3060 zone and climbed as high as 3.3090 level within the first minutes of trading. Afterwards, the domestic currency started to gain ground against the euro on back of high interest rates on the local money market. Commercial banks decided to sell the single currency, as they badly need RON to constitute their mandatory reserves at NBR, pushing the pair towards 3.3000 zone in the first part of trading.
On May 7th, the EUR/USD was quoted in the 1.3590-1.3625 zone amid quiet forex trading with no major economic releases. In early European trading on Tuesday, the pair remained in recent range, as it seems that the euro found some resistance in the 1.3625 area. Investors refrain from opening new positions on EUR/USD, as they are awaiting the FOMC meeting on Wednesday for clues regarding Fed's future moves. Also, this week the European Central Bank will be holding policy meeting on Thursday, at which it is largely expected to hold the interest rate flat at 3.75%.

MONEY MARKET
On Monday, the domestic money market opened a bit lower, as the overnight maturities were traded in the 8/12% zone. However, towards noon time, the scarce liquidity conditions have driven ON bids/asks higher to the 10/14% zone. On May 8th, the overnight interest rates were traded for 10/14% bids/asks at the opening of the local money market, however towards noon, ON yields rose until 12/16% zone, as the commercial banks have to meet their reserve requirements. For the rest of the week, the short term interest rates are likely to remain well above the policy rate, despite a 1M deposit worth RON 2bln at NBR would mature on Thursday.