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May 18, 2021

XTB: Romanian economy, expected to shrink by 2.1 per cent in Q3

Exports – the most dynamic sector of the economy, could be boosted by a moderate depreciation of the local currency in relation to the euro is BNR restricted operations that currently limit such depreciation, an analysis made by Central and Eastern Europe’s largest brokerage house – X-Trade Brokers – states. Despite the general upturn of the region, Romanian economy continues to be in difficulty, being expected to shrink by 2.1 per cent in Q3 further to falling local demand and income and surging VAT. ‘The export is the only field that managed to attenuate the tough decline that, under different conditions, would have been dramatically experienced. The depreciation of the Romanian leu at the end of 2008, when it was placed at a different level, was certainly a good thing from that point of view,’ Victor Safta, Manager of the Romanian subsidiary of X-trade Brokers, stated. A bank’s estimates suggest that, starting from October 2008, BNR has sold nearly EUR 11 bln in order to stabilise the exchange rate. For the moment, the prospect of BNR’s stabilizing presence continuing is the most probable.

‘According to its mandate, BNR is taking into account keeping financial stability and the trend of overdue loan repayments is, indeed, concerning. On the other hand, prudential requirements are enough for the time being and the real economy could benefit, through the viable channel of exports, from a moderate depreciation of the local currency. In addition, the dangerous tendency of predominant interest in foreign currency loans would be thus diminished, Victor Safta said.

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