Romanian leu follows regional trend

The exchange rate posted by BNR on Friday indicates a significant depreciation of the leu against the dollar, with more than RON 0.03 (0.64 percent), to RON 2.4371/$, from the RON 2.4215/$ level registered on Thursday.

The leu’s fluctuation is similar to that registered by regional currencies, the forint and the zloty, on the Hungarian and Polish markets, respectively.

Regional emerging country currencies, including the leu, strengthened against the euro, after the announcement of the Federal Reserve’s decision to reduce the discount rate, at which commercial banks seek refinancing from the American central bank system, to an annual 5.75 percent from 6.25 percent.

“All currencies in the region have bounced back, especially the Turkish lira. The Fed’s decision has raised confiden ce that the lack of liquidity on the American market will be solved, and will lower the pressure on emerging currencies,” Ioan Birle, head-dealer of Banca Transilvania, one of Romania’s top 10 banks, told NewsIn.

Analysts feel that the leu’s current evolution does not depend on the foundations of the Romanian economy. Florin Citu, Manager of ING Bank Romania, told the Money Channel that the leu’s depreciation registered in the past two weeks “has nothing to do with the National Bank of Romania, because the movement was abrupt and aggressive, and is clearly connected to what is happening on the international real estate market, including bankruptcies in the United States, and reorientation of investors from emerging markets to developed ones.”

On the other hand, the depreciation of the leu against the euro could help reduce the current account deficit, but will also stimulate inflation.