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Blood Bath On The Forex
Market
Blood everywhere! This is how
players described the scene yesterday on the foreign currency market. It
was the first day after NBR's official announcement that it would relax
control over the exchange rate to allow it to grow and would not intervene
to tighten control again, even in the event of a sharp drop in
rates.
This did not take long to happen: trading opened at
40,270/40,300 ROL to the euro, compared with 40,320 at Tuesday's close. At
noon NBR calculated an exchange rate of 39,371 ROL/EUR, down 846 ROL on
the previous day. Foreign currency sales also steamrollered the dollar,
which found itself down to 31,278 ROL, 661 ROL lower than on Tuesday.
Figures aside, foreign exchange dealings were spectacular: record
volumes were traded which saw bosses leaving their offices to sit in front
of the trading terminals themselves; phones were left off the hook because
of bewildered clients who could not believe their eyes - the ROL/EUR
"prefix" had changed overnight from "40" to "39", something not seen for a
year.
Those selling foreign currency for ROL almost had nervous
breakdowns when they saw how little they got for their money. On the other
hand, buying clients were simply ecstatic, even trying to delay their buy
orders to take advantage of the decline.
"The true power of market
forces has been shown. The predictability of the central bank's
interventions must be forgotten," Cristian Popa, NBR vice-governor
responsible for monetary policy, said yesterday.
These market
forces did their job pretty quickly. Sales of foreign currency pushed
rates to lows of 39,430/39,450 ROL to the euro. At one point, the exchange
rate rose by 600 ROL due to large buy orders, but fell afterwards as
quickly as it had risen to 39,750 ROL.
Author: Razvan
Voican
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