BNR Governor: Budget spending led to depreciation of the leu

He said the leu would not have dropped so low, if less funds had been spent at the end of 2007. Isarescu admitted that volatile capital exits are being made, but said they happened amid “weakness” of the local economy. “This is a bad habit of the Romanian economy to concentrate budget spending in the final two months of the year. The amounts were very large and impacted on the currency market,” he said.

Economy and Finance Minister Varujan Vosganian previously said that the leu is a victim of currency speculations and denied that depreciation was due to significant spending in December 2007.

In spite of the three-year low quotation of the leu, in the past two days Isarescu indicated that the leu will stabilize and even appreciate at some point, but did not mention a level foreseen for that appreciation.