The leu has depreciated by 4.2% in the last few weeks, despite the constant intervention on the market by the Central Bank to keep things in check. Romania’s prime minister Victor Ponta has told the public television that the leu-euro exchange rate will become stable after the referendum on the 29th of July on the impeachment of the suspended president Traian Basescu and once the government’s results and commitments are approved by the International Monetary Fund.

Ponta also said the depreciation of the leu is generated by the latest developments on the political scene, as well as the way in which the political statements made in Romania are perceived abroad.

Victor Ponta has emphasised the fact that rating agencies like Moody’s, Fitch and Standard and Poor’s have maintained their ratings for Romania, while at the same time downgrading the ratings of countries with stronger economies. From the opposition, the Liberal Democratic Party says voting YES to the impeachment of Traian Basescu will prolong the depreciation of the leu by at least another three months, while voting NO will bring about the stabilisation of the leu-euro exchange rate.

Dealers also believe the depreciation of the national currency is a result of the uncertainty on the political scene. Here’s Adrian Pirvulescu, a chief dealer with the Romanian Commercial Bank:

“The depreciation of the leu is part of a recent trend, being especially related to the political instability and less with the developments in the region. In fact, in the region, national currencies are for the time being growing against the euro, so the depreciation of the leu has nothing to do with what happens in the region.”

The exchange rate is a very clear indicator of economic performance in general. It influences purchasing power and economic growth, says Adrian Mitroi, a professor of economics and investments. In his opinion, the leu-euro exchange rate will continue to be volatile. Analysts believe political uncertainty won’t help put an end to the fall of the leu, given that financial markets are very sensitive to such movements. Their conclusion is that unless the political situation becomes stable, the pressure on the leu will continue.