From a weak leu to bank interest rates
The leu has reached a new record low against the euro and the depreciation of the Romanian currency is likely to continue according to financial experts
Mihai Pelin, 21.01.2019, 12:27
The Romanian currency, the leu, finished the week at a new record low against the euro. The leu has depreciated constantly in recent days. On Friday, the exchange rate set by the National Bank of Romania was 4.6975 against the euro. Under the circumstances, the president of the parliaments economic committee Daniel Zamfir asked the National Bank to change the regulation and method of establishing the ROBOR index, which is used for the calculation of consumption credits in lei.
He also invited the National Bank governor Mugur Isarescu and the president of the Competition Council Bogdan Chiritoiu to provide explanations on the subject. Zamfir, who is a senator of the Alliance of Liberals and Democrats, the junior member of the ruling coalition, says he has information originating from a hushed-up investigation of the Competition Council according to which this index is faked with the direct involvement of the National Bank and does not represent the result of a free market.
Daniel Zamfir: “The banks act in concert to raise the ROBOR level and thus make up for their own hard currency speculations. How? Its very easy, they raise the ROBOR level, thus leading to a rise in the rate paid by people who have credits and thats how they cover the holes they made elsewhere.
The senator says these allegations are based on information coming from the banking market and a report of the Competition Council that began ten years ago and which has never been published. The representatives of the Competition Council say no proof was discovered about a possible understanding between banks in 2008, and that the investigation was finalised in 2013.
The spokesman for the National Bank Dan Suciu has reacted to the allegations saying the ROBOR market functions in a very transparent manner and is constantly made public by the National Bank: “The National Bank has as main objective the stability of prices, that is inflation. The main instrument it uses is the monetary policy interest rate. It is around these monetary policy interest rates that the variation corridor is established. The ROBOR fluctuates on the market depending on this variation corridor. Thats how the market works all over the world.
The representatives of the National Bank of Romania also say that the depreciation of the national currency in recent days should not be a reason for concern. The Banks strategy advisor Adrian Vasilescu says that since the start of the year the leu has only depreciated by 0.6% and that the National Bank can only intervene if this level is in the region of 4 or 5%. Economic analysts say an exchange rate that is closer to the realities of the Romanian economy would be 4.75 lei for one euro. In their opinion, the leu will continue to depreciate in the coming period. (Translated by C. Mateescu, edited by D. Vijeu)
