Trend of public sector wages and social assistance in GDP: how, how much and what “can be given” with new pension law

The official data available since 2010 show an unbalancing in public finance that began in 2016 and reached a worrying level in 2018. Unfortunately, at… Mai mult

Ah ….Italy and Spain became history: Germany, second preferred country by Romanians, after UK

According to the dialectic principle, Romanians’ migration went to the next level and opened an even worse stage for the labour market in the country:… Mai mult

Alan Duncan / We cannot allow our societies to continue to be attacked and undermined

Global security is under threat. The system of international rules that has kept our citizens safe and our societies prosperous since the end of the Second… Mai mult

Q2 / Average monthly income per capita in Romania has risen to nearly RON 1,600: Changes in redistribution of family budget

Data published by INS for the second quarter of 2018 show that Romanians’ monthly incomes have reached nearly RON 1,600 per person. They were RON… Mai mult

Current account deficit flickers to red on dashboard

According to the data released by Eurostat, Romania’s current account deficit exceeded, in the second quarter of the year, the threshold of five percentage points… Mai mult

Romanian leu exchange rate and competitiveness – some comparative observations to neighbouring currencies

de Marin Pana , 29.1.2018

Romanian leu has depreciated against the euro in the past year by less than two percent, as an annual average, a similar value to the US dollar and much lower than the pound (the latter affected by the announcement regarding the exit from the EU).

Unlike the leu, the Hungarian forint and especially the Polish zloty appreciated last year compared to the European single currency. Apparently, the Poles had a superior evolution, but if we look more closely at the evolution in recent years, this is just about a recovery of the devaluation that was somehow higher in 2016 (more than four percent compared to just one percent in the case of the Romanian leu).


  • Evolution of euro exchange rates against some national currencies (2014-2017)
  • Year
  • Leu
  • Dollar
  • Pound
  • Forint
  • Zloty


Incidentally, the similarity between the leu and the zloty (both having the mention “new” added in the acronym and parities extremely close to each other, which in terms of retail prices makes us feel in Poland as home) was completely remarkable in 2014-2015, with the stability of the annual average euro exchange rate close to perfection.

If we look at the gains and losses of the dollar and pound, we can notice a much higher exchange rate stability in the Central European countries (where geographically we fit better than in the Balkans), with a floating exchange rate regime than in the big Western economies, less influenced by such fluctuations. Where the population does not even notice minor exchange rate variations, of one or two percent, which they consider normal.

In other words, from the perspective of the international practice, nothing special happened and there are no reasons for concerns for now. Although the gap is slightly bigger, there is no obvious difference compared to the previous three years, if we consider the difference, in terms of exchange rate, between the annual average and the end-of-year values, the latter being systematically more increased for seasonal reasons.


  • Year
  • Exchange rate at the end of the year
  • Average exchange rate
  • Difference


Romania’s competitiveness and real effective exchange rate

Let us now see to what extent the evolution of the exchange rate has affected or not Romania’s international competitiveness through costs or prices, relative to the main rivals on the international markets.

This is technically done by the so-called real effective exchange rate (REER abbreviated).

The indicator calculated based on the internationally harmonized rules from 42 countries (28 EU members + 14 industrialized countries, from USA and Japan to China, Russia and Turkey) with double weights in terms of exports (to correctly reflect the whole and not to give too much attention to the competition in the domestic market), shows an insignificant loss in competitiveness for Romania last year, according to the latest data processed and published by Eurostat.


  • Real Effective Exchange Rate – 42 partners (2010=100)
  • Dec 2016         Nov 2017         Difference
  • EU28
  • Eurozone 19
  • Romania
  • Poland
  • Hungary


The technical interpretation is a deterioration in competitiveness along with the increase of the indicator and vice-versa, the value of 100 being set for 2010. The relative appreciation of the single currency has quite clearly affected the competitiveness of the Eurozone countries and a little more the value registered for the whole EU.

The change in the latter was similar to that in Poland (which also had the highest appreciation of the exchange rate against the euro), higher than in Hungary (whose forint appreciated three times less than the zloty) and much more than in Romania, which chose the option of the acceptable depreciation but maintained its competitiveness.

Of course, it may not be the best way to preserve competitiveness and we would have the sustainable options, somehow more efficient on mid and long-term, for investments in modernisation, improving the business environment or expanding the infrastructure. But, in the meantime, balances are a daily challenge and are maintained with the means that we have available.

Unfortunately, by the channel of imported goods, all the more desirable in terms of price-to-value ratio the lower the euro exchange rate, and the one of the income growth rate that is double the GDP growth, the risk of the general price index inflation occurs.

Which makes the adjustment of the monetary policy difficult and sends us back to the economic fundamentals of the restraint in increasing wages and pensions, so as not to affect the competitiveness and not to weaken the national currency.

Mergeți în homepage ›

Publicat la data de 29.1.2018

Lăsați un comentariu


Eurobarometer / Romanians who believe that EU membership is a good thing have lost majority position

  The last Eurobarometer of the European Parliament, published in September, shows that 49% of Romanians consider that EU membership is a good thing. Compared… Mai mult

PSD announces consensus with ALDE on offshore law: 50% of production is sold on Romanian commodity exchange, maximum 30% deductions for operators

PSD and ALDE reached consensus on amendments to the offshore law, the leader of PSD deputies Daniel Suciu announced on Wednesday evening and said that… Mai mult

Siegfried Muresan asks for EUR 2 billion from EU post 2020 budget to defend rule of law

MEP Siegfried Muresan (PPE / PNL) has submitted this week an amendment to the European Parliament's interim report on the EU post-2020 multiannual budget and… Mai mult

National Bank of Romania caps maximum indebtedness at 40% of net income for loans in RON

BNR Board of Directors has adopted the new lending terms for individuals, according to which the maximum level of indebtedness will be 40% of the… Mai mult

Regional Operational Program has been amended: More than EUR 220 million, reallocated to SMEs and health infrastructure

The Regional Operational Program (ROP) for Romania has been modified to reallocate funds of EUR 220 million for the competitiveness of SMEs and the development… Mai mult

Cluj-Napoca - only city in Romania that receives European funds for innovative projects

Only Cluj-Napoca is among the 22 European cities that will receive financing from the European Regional Development Fund (FEDR) for innovative solutions in addressing urban… Mai mult

Prime Minister Dancila dismissed 13 of 15 civil society representatives from Economic and Social Council. They were blocking legislation that did not gathered all opinions

Prime Minister Viorica Dancila has replaced 13 of the 15 civil society representatives in the Economic and Social Council (CES). Following a decision published on… Mai mult

West Quadrilateral / Four counties joined to directly access European money for major infrastructure projects

From right to left: Gheorghe Falca, Nicolae Robu, Ilie Bolojan. Emil Boc, Mayor of Cluj Napoca, misses Four mayors from the West of the country… Mai mult

Chamber of Deputies / PSD loses UDMR’s support for amending Offshore Law, draft returns to committees for a week

The plenum of the Chamber of Deputies decided on Wednesday to resend the Offshore Law to committees after a seemingly surprising request of UDMR leader… Mai mult

Government amended insolvency law. Guarantees given by Minister Teodorovici

The Government adopted on Thursday the draft Emergency Ordinance for amending and supplementing legislation in the field of insolvency, which provides among other things for… Mai mult

Romania ranked 7th in EU in terms of renewable electricity

Unlike the vast majority of the economic areas, in which we are at the bottom of the European ranking, Romania succeeded to rank 7th by… Mai mult

Resounding failure of PSD lobbying action in Brussels

There are clear signs that the lobbying action launched by the ruling coalition in Brussels in favour of the government in Bucharest will end with… Mai mult

MFP: Romania does not endorse a separate budget for Eurozone and rejects the idea of ​​taxing financial transactions

Romania does not endorse a separate budget for Eurozone and rejects the idea of taxing financial transactions, Minister of Public Finance Eugen Teodorovici said after… Mai mult

Finance Ministry wants to change rules for insolvency: state could also register claims after procedure is launched

Companies’ possibility to avoid paying creditors (and in particular the payment of tax receivables) simply by declaring their insolvency would be drastically limited, according to… Mai mult