Romania’s RON falls to all-time low

Romania’s currency, RON, depreciated by 0.1 percent against the European single currency on Thursday, the exchange rate rising to 4.6695/EUR, the highest level in history, National Bank of Romania (BNR) data show, as developments in external markets and domestic tensions put pressure on the local financial market.

On Wednesday, the reference exchange rate was RON 4.6660/EUR. US dollar gained 0.4 percent to 4.0518 RON.

Romania’s currency reached the previous all-time low of 4.6679/EUR on January 23, 2018.

“Developments in external markets and domestic tensions have been felt in the financial market,” Banca Transilvania analysts said in a report released on Thursday.

Political tensions increased during the last couple of days in Romania, as thousands people protested last night in Bucharest against the changes made by the Parliament to essential justice laws.

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Protesters also gathered in other major Romanian cities like Cluj, Sibiu, Timisoara, Iasi and Brasov, all chanting against “thieves” and demanding the resignation of leaders in the PSD-ALDE coalition.

On Thursday, Romania’s three month money market rate (ROBOR), the main indicator that sets the interest rates for RON currency borrowers, reached a new record of the last three years and eight months of 2.95 percent.

The RON is expected to weaken by one percent versus the euro over the next year, according to a Reuters poll of 36 analysts.

The RON is considered more tightly managed by the central bank than its regional peers, which it has outperformed this year.

Analysts point out that inflation in Romania is the highest in the region and “mounting imbalances” in the budget and external positions could weigh on the RON.