Romania’s RON reaches fresh 1-month low vs. EUR

Sorin Melenciuc 08/06/2018 | 13:33

Romania’s currency, RON, depreciated for the second day in a row against the European single currency on Friday, the exchange rate rising by 0.04 percent to 4.6582/EUR, the highest level since May 3, National Bank of Romania (BNR) data show.

On Thursday, the reference exchange rate was RON 4.6564/EUR. US dollar gained 0.5 percent to 3.9589 RON.

Experts say the RON’s depreciation is due to higher liquidity in the money market on lower intervention decided by the central bank, but recent political tension and debates about the future of Pillar II pension funds may have played a role.

Romaniațs currency 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.

“As the National Bank of Romania mentioned that they will allow greater FX flexibility… (this factor), together with strong USD and further policy tightening in the US, will act unfavorably for the leu,” said Jakub Kratky, analyst of Generali CEE, cited by Reuters.

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