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March 30, 2023

Political crisis could lead to minimum annual values for the leu – RON/EUR 4.55

A formal split in the government alliance could push the national currency toward the minimum values of this year of approx. RON/EUR 4.55, ING Bank warns in a report issued yesterday to clients, according to hotnews.ro.
“However, we believe this tendency will be temporary because we expect the central bank to maintain the market liquidity sterilization pattern, particularly given that this activity is motivated by recent European fund inputs,” the report mentions further.
As a result of political uncertainty, the leu stagnated around the value of RON/EUR 4.51. The reference exchange rate announced yesterday by the National Bank of Romania (BNR) went up by 0.72 bani (0.16 percent) to RON/EUR 4.5173, after a slight drop in the previous two trading sessions, but trading volumes were low. The leu depreciated Tuesday relative to the U.S. dollar as well, as the exchange rate went up by 0.85 bani (0.26 percent), from RON/USD 3.2773 to RON/USD 3.2858. The RON/CHF reference exchange rate went up by 0.73 bani (0.2 percent), from 3.6968 units to 3.7041 units. According to the ING report, the new stability of reserves has had a positive effect on the overall inter-banking liquidity, with an ON rate below 2 percent that suggests the liquidity surplus is visible. However, the same report notes, “we believe an unstable political environment and even a fragile government coalition could lead to rates for maturity periods situated farther apart on the FC swap curb not following drops in the ON rate as accurately as in the past.”

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