FINANS DAILY TREASURY DIVISION March 06, 2006

"The one thing that hurts more than having to pay income tax is not having to pay income tax." - Thomas Duwar

FOREX MARKET
We shall have a busy week ahead with IAEA meeting on Iran today and possible UN Security Council moves later this week. At present, only the energy markets seem to be pricing in any level of worry - and it's a bit surprising to see the market so calm on this issue. The US Trade Balance is to be released on Thursday and the US employment data is up on Friday. These data could induce significant moves in the EUR/USD exchange rate, if judging after last month. EUR/USD broke higher through resistance on Monday, but that development may have been caused by the moves in EUR/JPY in Asian trade. The pair will need to stay above 1.2030/50 to keep the short-term momentum going to the upside, with 1.2100 the next theoretical resistance.

The EUR/RON exchange rate remained flat in the 3.4700-3.4800 area on Friday in calm trading. The Romanian currency seems to have entered a consolidating path lately as it limited its rangebound zone to less than 100 pips. The 3.4850 level has proved as being a strong resistance area lately, however we expect that it would finally be broken today, due to NBR쳌s decision to drain only an insignificant amount within the overall offer of the commercial banks.

MONEY MARKET
The already usual Monday depo auction of the NBR surprised the market as the allotment percentage stood at only 22% of the total bids. The National Bank drained RON 500mln from the interbank market, revealing their worry regards the sharp appreciation of the RON in the last month. This move might represent a clear proof that the National Bank won쳌t increase the monetary policy rate in the coming months. The ON interest rates remained dormant in the 7- 9% area, irrespective NBR's decision. However, we expect that the short tenor yields to decrease slightly this week.