“To save in lei, for interest on deposits in the local currency, is very good. The same is true of leu-denominated loans, including long-term. I would advise them to keep borrowing euro, but large amounts in foreign currencies are no longer available. There are insufficient euro in the country to ensure sustained growth for foreign currency-denominated lending,” according to a statement for Business Standard by Dragos Cabat, President of CFA.
Some two thirds of Romanian bank deposits, amounting to €38.42 billion at the end of October, were leu-denominated. Romanian’s took out 56 percent of loans in foreign currencies, worth €52.3 bln by that same period. “Euro-denominated loans are not advisable for persons who do not receive their income in euro. I do not believe that the depreciation of the national currency will stop here. Banks are no longer offering foreign currency loans, because they have realized this is very risky. Likewise, lei-denominated loans were based on resources in euro attracted from outside the country,” said Nicolae Alexandru-Chidesciuc, Senior Economist at ING Bank NV, Bucharest branch.
