The Romanian currency has approached again the all-time low level registered in January against the European single currency, as the market tests the upside potential of the exchange rate following several weak statistics regarding the local economic perspectives.
The exchange rate rose on Wednesday by 0.1 percent to 4.7632/EUR, the second-highest all-time EUR/RON exchange rate, National Bank of Romania (BNR) data show.
The EUR/RON pair approaches again the all-time low of 4.7648/EUR registered on January 25.
Analysts say the depreciation is driven by a mix of factors.
“The market didn’t wait too long to test the upside potential of the EUR/RON. The above-consensus February inflation data and low carry fuelled selling in the Romanian leu, predominantly in the second part of the trading session. A particularly weak trading balance added fuel to the fire,” ING Bank analysts said on Wednesday in a research note.
“We are now around historical highs and it will be interesting to see if the central bank remains comfortable with these levels, given that it didn’t intervene to mop up the surplus liquidity from the money market. We tend to believe that a line in the sand will be reinforced,” the added.
According to a recent Reuters poll, the Romanian currency is expected to weaken 1 percent in the coming year against the European single currency up to RON 4.795/EUR mainly due to the new taxes imposed this year to banks and energy and telecom firms.
US dollar lost 0.1 percent to RON 4.2175.
Romania’s three-month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, slightly rose on Wednesday to 3.06 percent.