"We confess to little faults only to persuade ourselves that we have no great ones." - La Rochefoucauld

FOREX MARKET
On Monday, investors sold the euro for the dollar, pushing the pair down to 1.2940 zone, as the G7's officials failed to take position against yen's weakness. Only, the president of ECB, Jean-Claude Trichet decided to warn the markets on the risks of carry trades: �We want the markets to be aware of the risks of one-way bets, in particular on the foreign exchange market �. The future of the carry trades is in great focus lately and the market watchers will be waiting for the GDP numbers on Thursday to figure out the decision of BOJ next week. On February 13th, the pair was traded in recent range, between 1.2980-1.3000, in early European forex session. The market will be focusing over Germany's ZEW survey for February and US Trade Balance for December 2006.
On Monday, the domestic forex market opened at 3.3860 level and shortly after, the euro buying orders depreciated the domestic currency. The National Bank decided to diminish the policy rate by 75 bps to 8% at its Board meeting on February 9th and to keep unchanged the minimum reserve requirement ratios. The rate cut was determined by the recent evolution of macro-economical indicators, but also to curb the sudden appreciation of the Romanian currency. RON was also hit by the regional weakness, as some investors decided to cash in their profits, pushing the pair towards 3.4000 zone, which held on yesterday.
On February 13th, the single currency was bided at 3.3950 level at the opening of the domestic forex session. EUR could not maintain its recent gains, as the pair slid back to 3.3900 zone in the first part of the trading.

MONEY MARKET
The overnight interest rates declined slightly on Tuesday, to 5.5/7% zone. On February 12th, the Minister of Finance issued treasury bills at six-month maturities, draining RON 100mln from the primary market. The average yield reached 6.05%, rising slightly as compared with the yields requested at the previous 6M T-bills auction in January, as the interest rates for the short term maturities recovered significantly, as the liquidity of the domestic market restrained since then. Also, the NBR held its usual Monday deposit auction through which it sterilized RON 3bln at the new 8% fixed rate. NBR increased the allotment ratio to 26% of the overall offer, in compliance with its recent statement on February 9th: �Money market rates have constantly been below the monetary policy rate so far, which calls for the adoption of measures to enhance the signaling role of the latter. �