Romanian households cash term deposits to buy foreign currency in Jan-Apr

The volume of bank deposits held by Romanian households in local banks has increased by RON 1.3 bln (EUR 260 mln) in the first four months of the year (to RON 285.2 bln), according to the end-April loan and deposit data released by the National Bank of Romania (BNR).

It is indeed a relatively smaller advance, only 0.5% of the stock of deposits held at the end of 2021 and 7.5-fold less than the household deposits’ leap (RON 9.8 bln) in the same period last year. But it is still a positive dynamic, at least in nominal terms.

Considering the much higher food and energy prices, the figures can hardly support the hypothesis of massive private consumption prompted by an “inflationary behaviour” - although this remains one of the possible (negative) scenarios for the first part of the year.

Consumer prices have advanced by 7.9% over the first four months of the year, the equivalent of a loss above RON 20 bln (EUR 4 bln) incurred by households. To prevent even more losses, the households have visibly cashed part of their term deposits (as the deposit interest rates lag well behind inflation, thanks to BNR’s dovish policy). But figures show that the money migrated to foreign currency - and was not just spent overnight.

The stock of term deposits has decreased by RON 3.97 bln in the first four months of the year, while the overnight deposits increased by RON 5.28 bln.

When it comes to the overnight deposits, the local currency deposits contracted by RON 4.11 bln, while the stock of deposits in euros and other currencies (USD mainly) increased significantly by RON 7.36 bln and RON 2.03 bln, respectively. 

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)

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Romanian households cash term deposits to buy foreign currency in Jan-Apr

The volume of bank deposits held by Romanian households in local banks has increased by RON 1.3 bln (EUR 260 mln) in the first four months of the year (to RON 285.2 bln), according to the end-April loan and deposit data released by the National Bank of Romania (BNR).

It is indeed a relatively smaller advance, only 0.5% of the stock of deposits held at the end of 2021 and 7.5-fold less than the household deposits’ leap (RON 9.8 bln) in the same period last year. But it is still a positive dynamic, at least in nominal terms.

Considering the much higher food and energy prices, the figures can hardly support the hypothesis of massive private consumption prompted by an “inflationary behaviour” - although this remains one of the possible (negative) scenarios for the first part of the year.

Consumer prices have advanced by 7.9% over the first four months of the year, the equivalent of a loss above RON 20 bln (EUR 4 bln) incurred by households. To prevent even more losses, the households have visibly cashed part of their term deposits (as the deposit interest rates lag well behind inflation, thanks to BNR’s dovish policy). But figures show that the money migrated to foreign currency - and was not just spent overnight.

The stock of term deposits has decreased by RON 3.97 bln in the first four months of the year, while the overnight deposits increased by RON 5.28 bln.

When it comes to the overnight deposits, the local currency deposits contracted by RON 4.11 bln, while the stock of deposits in euros and other currencies (USD mainly) increased significantly by RON 7.36 bln and RON 2.03 bln, respectively. 

iulian@romania-insider.com

(Photo source: Inquam Photos/Octav Ganea)

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