Surprise decision of the National Bank of Romania to cut the minimum foreign reserve requirements ratio on foreign currency-denominated liabilities from 25% to 20%, thereby releasing over one billion euros to banks, is interpreted by bank analysts as a signal encouraging lending and indirectly the economy.

In general, foreign currency-denominated loans are seen as an alternative way to support investments and real estate acquisitions.

"We see the NBR's decision as an attempt to prop up economic growth amid inflationary pressures limiting the possibility of cutting the key interest rate," comments Eugen Sinca, analyst with the BCR. The NBR has kept its key interest rate at 6.25% a year, which has remained unchanged since May last year.

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