Key Moments
- Romania’s sovereign rating remained at Baa3 with a negative outlook at Moody’s, following an unchanged decision by Fitch a week earlier.
- ING expects the National Bank of Romania to keep its key rate at 6.50% and does not project a first rate cut until January 2027.
- EUR/RON is seen staying just below 5.25, with only limited room for moves despite potential short-term RON strength on rating relief.
Rating Decisions Ease Pressure on Romanian Bonds
ING’s Frantisek Taborsky notes that Romania’s sovereign credit profile has been reaffirmed, with Moody’s maintaining a Baa3 rating and a negative outlook. This follows Fitch’s decision a week earlier to also leave its rating unchanged. According to Taborsky, these outcomes should help alleviate recent pressure in the Romanian government bond market after ROMGBs underperformed.
He highlights that longer-dated Romanian government bonds sold off by around 15bp at the long end last week, even as peer markets in the region moved higher. The confirmation of ratings at both agencies is seen as a stabilizing factor for sentiment toward Romanian assets.
| Agency | Rating | Outlook | Recent Action |
|---|---|---|---|
| Moody’s | Baa3 | Negative | Unchanged |
| Fitch | Not specified | Not specified | Unchanged decision a week earlier |
NBR Seen Holding Rates, With Easing Pushed Far Out
Taborsky expects the National Bank of Romania to leave its key policy rate unchanged at 6.50% at its meeting today. He does not anticipate any notable change in communication compared with previous meetings and reiterates ING’s projection that the first policy rate cut will come only in January 2027.
He states: “Today, the National Bank of Romania is expected to keep rates unchanged at 6.50%, and we see little reason for a shift in tone versus previous meetings, with our forecast still pointing to the first rate cut only in January 2027.”
FX Outlook: Limited EUR/RON Moves, Potential Short-Term RON Rally
The Romanian leu’s exchange rate against the euro is expected to remain relatively stable. Taborsky observes that EUR/RON is currently trading just below 5.25 and anticipates only modest fluctuations, given the central bank’s limited flexibility to accept additional inflation pressures.
He comments: “EUR/RON remains anchored just below 5.25, and we expect limited movement given the NBR’s lack of room to tolerate additional inflation pressure. However, relief over the unchanged rating could support a RON rally today as buyers and carry trades return to the market.”
“Moody’s kept Romania’s rating at Baa3 with a negative outlook, following Fitch’s unchanged decision a week earlier. This should offer some relief after ROMGBs sold off by around 15bp at the long end last week, even as the rest of the region rallied.”
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