Romanian leu sees record low

The Romanian currency reaches record low against the euro.

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Daniela Budu, 19.11.2019, 13:55

Romania’s
national currency, the leu, has exceeded the psychological threshold of 4.77 for
one euro, thus reaching a historic low against the European single currency.
The leu has been constantly depreciating for the last two months and a half.
The governor of the National Bank of Romania Mugur Isarescu said at the
beginning of the month, when the leu was fluctuating between 4.72 and 4.76 for
one euro, that these variations are minor compared with those of the Hungarian
forint and the Polish zloty, which have seen much bigger fluctuations.

The new finance
minister Florin Citu also says the fluctuation of the leu-euro exchange rate is
not very high given that it depends more on the international context, but that
there are other negative figures, such as those concerning the national
industrial sector which can be said to have entered into recession. The
minister says the Romanian economy is growing at a rate of 3% instead of the
5.5% estimated in the budget, the level of foreign investment is lower after
nine months compared with last year and industry already has three quarters
with negative figures. Florin Citu believes, however, that it’s best for the
national currency to be self-regulating, something seen in the figures.

We recall that
at the beginning of the year, the record low exchange rate reported in January
was 4.76 lei for one euro, which is very similar to what we’re seeing now. It’s
worth mentioning that the national currency was also depreciating at the time
against the US dollar and the Swiss franc. On the other hand, analysts noted in
a report for investors published in October that if the pressure on the leu is
maintained with an exchange rate of over 4.73 and if it later reaches 7.7, the
leu may then depreciate even further to 4.8 for one euro in the short or medium
run. They say the same thing now, when the leu has reached a new record low.
However, analysts also say that it’s a good thing that the historic lows seen
this week, last week or at the beginning of the year are very small, with the
depreciation from one day to another being very low.

Overall, since
the beginning of the month, the Romanian currency has lost 1.5 bani against the
euro. Next year it is estimated that the euro will exceed 4.82 lei. A strong
euro compared with the leu means a chain of price hikes, experts also say, from
higher interest rates on loans in euros to higher utility bills and more
expensive homes.