bne IntelliNews – Cash term deposits of Romanians to buy foreign currency

The volume of bank deposits held by Romanian households in local banks increased by 1.3 billion RON (260 million euros) in the first four months of the year to reach 285.2 billion RON, according to end-April data on loans and deposits published by the National Bank. of Romania (BNR).

This is a relatively small increase, only 0.5% since the beginning of the year for the stock of deposits and 7.5 times less than the jump in household deposits (9.8 billion RON) observed. during the same four-month period last year. But it remains a positive dynamic, at least in nominal terms.

Given the much higher food and energy prices, the figures can hardly support the hypothesis of massive private consumption induced by “inflationary behavior” – even if this remains one of the possible (negative) scenarios for the first part of the year.

To support this, the volume of new term deposits generated by households during the first quarter (latest available data) was 20.4 billion RON – 5.2% more compared to the first quarter of 2021. Indeed, the vast majority of new depots have tenants less than a year old. — but this is widely expected in the current inflationary circumstances and given the still low interest rates on deposits.

Consumer prices increased by 7.9% over the first four months of the year, equivalent to a loss of more than RON 20 billion suffered by households.

To avoid even more losses, households have cashed in part of their time deposits, as interest rates on deposits are well below inflation, thanks to the accommodative policy of the BNR.

But the figures show that the money has migrated into foreign currencies – and hasn’t been spent overnight.

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

Regarding demand deposits, local currency deposits contracted by 4.11 billion RON, while the stock of deposits in euros and other currencies (mainly US dollars) increased significantly by 7.36 billion RON and 2.03 billion RON respectively.