| RECORD APPRECIATION OF THE ROMANIAN CURRENCY, THE LEU (19.06.2007) |
| (2007-06-19) |
| Last updated: 2007-06-20 15:49 EET |
The leu also reached a record high as against the USD, with the National Bank of Romania setting a rate of 2.40 lei for 1 USD. This rate was last registered 6 years and 9 months ago. Analysts expect the leu’s appreciation trend to continue. Why has Romania’s national currency become attractive? Councillor of the National Bank of Romania’s governor, Adrian Vasilescu, believes that the appreciation is due to massive sales of euros and dollars on the Romanian market, with an ever-increasing demand mainly from foreign investors. There are 2 types of consequences, in Vasilescu’s view.
On a short term, the leu’s appreciation is good news for importers who will pay less for goods purchased abroad and for people who have made loans in foreign currency, because they will have to exchange fewer lei to pay their instalments. The leu’s appreciation also brings benefits for people who want to obtain new credits. Exporters stand at the opposite pole, unhappy that the appreciation of the national currency will lead to more expensive products. People who receive their salaries in foreign currency are also discontent with the appreciation. Vasilescu says that, on a long term, a strengthened national currency will translate as better living conditions, as it makes disinflation possible.
However, according to Liviu Voinea, an expert with the Applied Economy Group, the leu’s current rate is in no way connected to Romania’s economic grounds. He recalls that, although the trade deficit doubled during the first 5 months of the year, foreign investments dropped, economic growth did not meet expectations, and industrial production is sluggish, the leu continues to appreciate. In Voinea’s view, this is due to speculations, mainly banks and foreign investment funds, which take advantage of the difference in credits and deposits emerging between the leu and the euro or the dollar.
Voinea believes that at present, the Romanian state no longer has many available levers to contain the leu’s appreciation. The National bank of Romania has already reduced the reference interest 3 times since the beginning of the year, without obtaining too many results. As a result, until foreign speculative capitals are pulled out from the market, the leu’s rate will not be modified, irrespective of the national economy’s evolution.
|
2025-04-03
Print
Listen again