BUCHAREST, Aug 6 (Reuters) - Romania's finance ministry should consider meeting market yield levels at leu currency debt issues, central bank Governor Mugur Isarescu said on Friday.
The ministry has imposed a cap of 7 percent at debt tenders since May, scaling down issuance and even rejecting all bids at numerous tenders, compensating failed auctions with short term money market loans and euro-denominated issues.
But analysts say higher value added tax, which will push inflation significantly above target this year, and fiscal uncertainty will keep investors demanding higher yields.
'I saw the ministry met quite nicely with the market at their euro issue ... we encourage them to meet with the market with leu issue as well,' Isarescu said.
He also said the bank's decision to keep its benchmark interest rate flat at 6.25 percent earlier this week was cautious of potential second round effects of the VAT hike.
(Reporting by Marius Zaharia; Editing by Sam Cage) Keywords: ROMANIA CBANK/RATES (marius.zaharia@reuters.com ; +40 21 315 8320; Reuters Messaging: marius.zaharia.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
The ministry has imposed a cap of 7 percent at debt tenders since May, scaling down issuance and even rejecting all bids at numerous tenders, compensating failed auctions with short term money market loans and euro-denominated issues.
But analysts say higher value added tax, which will push inflation significantly above target this year, and fiscal uncertainty will keep investors demanding higher yields.
'I saw the ministry met quite nicely with the market at their euro issue ... we encourage them to meet with the market with leu issue as well,' Isarescu said.
He also said the bank's decision to keep its benchmark interest rate flat at 6.25 percent earlier this week was cautious of potential second round effects of the VAT hike.
(Reporting by Marius Zaharia; Editing by Sam Cage) Keywords: ROMANIA CBANK/RATES (marius.zaharia@reuters.com ; +40 21 315 8320; Reuters Messaging: marius.zaharia.reuters.com@reuters.net ) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.