RON crumbles again after Constitutional Court delays referendum decision

Newsroom 03/08/2012 | 08:58

Romanian currency RON started to lose ground again after the Constitutional Court announced on Thursday that it would delay until September 12 the decision regarding the referendum.

The EUR appreciated against the RON, now reaching RON 4.64 per EUR 1, and it is heading for the historic threshold of RON 4.65 per EUR 1.

Also, the RON depreciated in relation to the USD, reaching RON 3.75 per USD 1.

Initially, the Romanian national currency appreciated after preliminary referendum data showed that the necessary quorum for the validation of the referendum had not been reached.

Political tension is expected to put further pressure on the RON. Meanwhile, Mugur Isarescu, the governor of the Romanian National Bank, called for political caution.

“Since an appeasement in the European financial situation is not expected over the next weeks, we are faced with major decisions in the next period. In all likelihood, the pressure will continue and consequently, a relaxation of the internal political situation would help very much, since it would put the investors’ confidence back on track,” said Isarescu, adding that many investors have long-term commitments and investment plans in the Romanian economy.

The governor also warned that the prognosis of 1.5 percent of economic growth should be reduced, as shown by data regarding the evolution at this point, especially in agriculture.

“There is sufficient data, including the situation in agriculture, that justify a prognosis of economic growth that is at least partially reduced. (…) I did not say that I share the EBRD estimation but that there are reasons to revise the growth,” said Isarescu.

The European Bank for Reconstruction and Development (EBRD) worsened Romania’s economic growth prognosis for 2012 from 1.2 percent to 0.8 percent.

Otilia Haraga

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