Alarmists 'licking their wounds' after panic on domestic forex market

The recent phenomenon on the domestic forex trading market, when the spreads between the bid and ask prices on the main foreign currencies have been excessively great and often represented more than one leu, can be explained by the fact that the participants in the market, in particular banks and currency exchange outlets, really don't know how things might develop in the immediate future, Financial Brains director PhD Sveatoslav Mihalache has told Info-Prim Neo. This morning (Sept.28), the spreads narrowed somehow – a sign that panicky moods have lessened – while the banks and other forex traders which bought dollars at the end of last week at prices higher than 11.90 lei are now licking their wounds and assessing losses. “The participants in the market got used to the fact that the National Bank would carry out direct interventions every time the fluctuations are too high. But when it doesn't do it, the participants should assume the risks of the trade and avoid being affected with panic”, says PhD Mihalache. “We must stress that the money mass of lei has not changed and, if the official figures concerning the inputs and outputs of capital are correctly stated, while the unofficial figures are estimated more or less accurately, then the dollar should find itself in a balance on the domestic market, which should be around the level of 11.60 – 80 lei”, says PhD Sveatoslav Mihalache in confirmation of his earlier prediction. On the international market, the dollar gained against the Euro and the British Pound in the wake of discussions at the G-20 summit about the role of the USD in the IMF's basket of currencies. This morning, the euro plummeted from $1.4710 to $1.4560, a sign that Financial Brains' forecast that the Euro will drop to $1.4450, could soon prove right, with a margin of 20 pips.