----- Original Message ----- From: [EMAIL PROTECTED] To: [EMAIL PROTECTED] Sent: Wednesday, March 09, 2005 8:02 PM Subject: [romania-economics] News FACTBOX-Steps in Romania capital account liberalisation FACTBOX-Steps in Romania capital account liberalisation BUCHAREST, March 9 (Reuters) - Romania opens its foreign currency market to foreigners this week as part of measures to free capital flows ahead of joining the European Union in 2007. Here are the main steps of the capital account liberalisation: FOREX MARKET A central bank decision to allow foreigners free access to the Romanian interbank foreign exchange market comes into force on March 11. This opens the way for foreign, non-resident banks to trade in the Romanian leu (EURROL-) if they open accounts at local banks in Romania. Romanian companies will also be allowed to buy hard currency without producing proof of commercial transactions. The measure applies mainly to spot transactions. For forward deals, documentation proving that they are needed for hedging potential risks of foreign trade operations must be provided -- the price of forward transactions is calculated taking into account the difference between interest rates for hard currency and those for leu, and they could be used by investors to take advantage of the higher leu interest rates. Banks' foreign exposure limit of 20 percent of their own funds, as well as exposure limits agreed by banks with each other, may mean the market will absorb only limited hard currency inflows. Special purpose vehicles (SPVs), local companies set up by foreigners to have access to the Romanian market, will still be needed for those who want to open leu deposits or trade in government securities, which are not yet liberalised. LEU DEPOSITS The central bank is expected to give access to foreigners to leu deposits by end-June, a move that would complement the foreign exchange liberalisation and enable investors to take positions in Romanian assets. Analysts estimate that around three billion euros in hot cash could enter Romania after the move, causing the leu to firm sharply. This has prompted the central bank to speak about some "safeguards," or curbs, on foreign capital inflows, but the EU is likely to oppose them. Both sides will negotiate on the issue this week in Brussels. The International Monetary Fund (IMF) backs the central bank view. It argues that full liberalisation could hinder the central bank's efforts to fight inflation and a high current account deficit because it would have to lower interest rates to fend off speculators, although a stronger currency would also act as a brake on prices. DEBT The Finance Ministry plans to give access to non-residents to government securities on January 1, 2006. Previously it was expected that this would take place a year later. The total value of domestic debt with maturities higher than one year was 26.2 trillion lei ($972 million) by November 2004. MONEY MARKET On Jan. 1, 2007, Romania plans to allow foreigners access to short term money market instruments such as T-bills and the central bank's certificates of deposit used to regulate the liquidity of the money market. 03/09/05 10:14 ET #end ------------------------ Yahoo! Groups Sponsor --------------------~--> Take a look at donorschoose.org, an excellent charitable web site for anyone who cares about public education! http://us.click.yahoo.com/_OLuKD/8WnJAA/cUmLAA/RR.olB/TM --------------------------------------------------------------------~-> EuroAtlantic Club: http://www.europe.org.ro/euroatlantic_club/ *** Birou de traduceri autorizate. Oana Gheorghiu - tel/fax: 252.8681 / [EMAIL PROTECTED] Yahoo! Groups Links <*> To visit your group on the web, go to: http://groups.yahoo.com/group/romania_eu_list/ <*> To unsubscribe from this group, send an email to: [EMAIL PROTECTED] <*> Your use of Yahoo! Groups is subject to: http://docs.yahoo.com/info/terms/
