"In a completely rational society, the best of us would be teachers and the rest of us would have to settle for something less, because passing civilisation along from one generation to the next ought to be the highest honour and the highest responsibility anyone could have." - Lee Iacocca

FOREX MARKET
Germany's ZEW Survey on economic sentiment turned to be deeply disappointing as it came out at -5.6 vs. 11.4 consensus estimate. The euro weakened against the dollar which turned the momentum into its favour. The USD found support overnight in American trading on back of bullish comments by Fed President Moskow who indicated high risks on inflation. Moskow brought back to the pipeline FED's interest rate theme. On his background, the euro lost more than 100 pips within a day, falling until 1.2780 zone. Presently, the pair is traded at 1.2820 level, as the market is waiting for US Existing Home Sales data.
On August 22nd, the National Bank released the current account balance which widened to EUR 4,170mln in the first semester of 2006, rising by 40% vs. the same timeframe last year. The trade balance remained the main driver behind the shortfall of the current account, with a deficit of EUR 4,385mln, as the high domestic demand keeps on fueling the imports. The services continued to perform modestly, as they posted a surplus of only EUR 94mln, on back of improved activity at other services category. The income gap extended to EUR 1,437mln. The current transfers diminished by 0.2% vs. H1 2005 and reached EUR 1,558mln. They were unable to counteract the negative effects generated by the foreign trade, as the foreign remittances continue to decrease. In the first half of 2006, Romania's rampant current account deficit was financed by the foreign direct investments in 76% ratio, however this does not exclude risks on the medium term.
RON continues to be traded a tight range between 3.5200-3.5300 levels as the transacted levels remained thin. The investors seem to have little interest presently for the emerging currencies, as the forex trades are made mostly in commercial purposes.

MONEY MARKET
The overnight interest rates remained still in the 1-3% zone, although NBR wrapped out RON 4.6bln from the domestic interbank market on Monday. The short time interest rates are likely to recover to 6-8% levels in the first day of the mandatory reserve, as the commercial banks preferred to keep some of their liquidities at hand.