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BNR’s Vasilescu: The leu declined fast, after 1 January, but not as fast as to create concerns

The decline of the national currency in relation to the euro is 0.6 percent, and only in the situation in which it declines over 4-5 percent the Central Bank analysis rigor intervenes, National Bank of Romania (BNR) strategy consultant Adrian Vasilescu maintains.

“It is clear that the national currency has moved downwards fast after 1 January, but not as fast as to create concerns among those who make a rigorous analysis of the market. Books say that when a currency, regardless on which market, declines over 4 percent or 5 percent there comes a situation that must be analysed in view of some interventions of the Central Bank. In our case, the devaluation is 0.6 percent, which doesn’t fall under any intervention rigor of the Central Bank. I am saying this because in the public space there often comes the question: ‘What is BNR doing? Why doesn’t the BNR intervene?’. In the first place, the National Bank, as no other central bank nonetheless, will not be able to and will never do any intervention against the natural exchange rate of the currency. This natural exchange rate is determined by causes that aren’t on the currency market, but on the extra-currency market. The devaluation reasons are outside the currency market,” Adrian Vasilescu explained on Digi24 private television broadcaster.

The BNR official explained that the moment the local currency market goes up or down excessively “we look around, because we are in a region.”

“The moment the local currency market goes up or down excessively we look around, because we are in a region, where, these days, after 1 January, the forint had a devaluation moment in the middle of this months, after which it regularised its rate and entered a normal trend, the Czech crown fares well, and the Polish zloty is stabilised. (…) There are a few causes that are also related to our particularities. One, the Ordinance [Ordinance 114 on some fiscal-budget measures] doesn’t come first, because many say so. There is also the Ordinance, but first comes the balance of payments, the trade balance which then reflects into the balance of payments. The fact that Romania imported last year as compared to exports goods worth over 1 billion euro each month created a special situation on the currency market. Therefore, the currency market firstly looks at what happens with the trade balance. How much a country imports, how much it exports and what is the difference between imports and exports. Only if exports are good, imports go faster than exports. Then the leu -foreign currency exchange rate is the first mechanism that intervenes to re-balance things in economy. We import so much because we have a high consumption demand that cannot be covered by the domestic offer of goods and services. To cover this demand we resort to imports. Importers are stimulated to bring goods from abroad,” the BNR strategy consultant mentioned.

The National Bank of Romania (BNR) on Friday posted a 4.6975 lei for one euro exchange rate, increasing 0.85 bani (+0.18 percent) from the rate announced on Thursday.

Moreover, the leu also dropped in relation to the US dollar, which reached 4.1192 lei, increasing 0.66 bani (0.16 percent) from the rate on Thursday, namely 4.1126 lei per dollar.

On the other hand, the national currency went up in the exchange rate for a Swiss franc, 0.12 bani (-0.03 percent). Thus, the franc exchange rate reached 4.1441 lei, compared to 4.1553 lei per franc one day before.

The gram of gold went down by 0.92 lei, to 170.2283 lei, from 171.1534 lei, in the previous session.

 

BNR: Number of individual debtors with loans denominated in Swiss francs decreased down to 20,651 in Nov

 

The number of individual debtors with loans denominated in Swiss francs decreased down to 20,651 in November 2018, from 38,519 in December 2016, according to data released by the National Bank of Romania (BNR).

“According to the operative information reported by the credit institutions in Romania, the number of individual debtors with loans denominated in Swiss francs decreased down to 20,651 in November 2018, from 38,519 in December 2016 (and 75,412 in November 2014). The operative data also shows that, in the end of November 2018, the banks had a balance of 9,294 mortgage loans and 8,969 consumer loans guaranteed with mortgages. The balance of these loans, both consumer loans and real estate loans, dropped by 1.8 billion lei, down to 3.4 billion lei, from 5.2 billion lei, in December 2016-November 2018 (and 9.8 billion lei in 2014),” shows BNR.

Moreover, the banks also had 82 loans in Swiss francs granted to 65 companies in end of November last year, worth approximately 45 million lei.

Among the debtors who requested and accepted conversions or restructuring starting with 2015, a number of 25,525 benefited from conversion and other 13,327 from restructuring by the end of 2018.

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