Reversed trend in mutual funds: Romanians invested more money than they withdrew. They look for funds with government bonds

Net subscriptions in Romanian mutual funds (the difference between invested and withdrawn amounts) became again positive in 2019 after they had been negative in 2018.… Mai mult

Romgaz has started exploitation of richest onshore gas deposits discovered in 30 years

Romgaz (SNG) announced the start of production in the deep area of Caragele deposit (Buzau), the biggest discovered in the last 30 years and one… Mai mult

4.9% – Romania’s spectacular public deficit in Q3. 2 times more than anyone else in the EU

Romania managed again to stand out at the EU level by recording the highest level of the public deficit in the third quarter of 2019,… Mai mult

Again -7.7% (!) in industrial production: 6th consecutive month with a negative result

According to data provided by INS, in November 2019 Romania recorded a new alarming decrease in monthly industrial production at the level of the negative… Mai mult

12.6% of Romanian children and young people under 20 live abroad

Almost 600,000 Romanian children and young people aged between 0 and 19 years, that is 12.6% of the total Romanian people in this age group,… Mai mult


Romanian Leu of 2019: Depreciation rate depends on budget credibility and seriousness

de Adrian N Ionescu , 14.1.2019

The estimates by economists of most important banks in Romania on the depreciation of the local currency for this year range between 4.73 and 4.77 RON/euro.

The depreciation of the Romanian leu in the past few days is the effect of uncertainties regarding the soundness of the state budget in 2019, amid macroeconomic imbalances gathered over the last period, according to analysts of large banks in Romania.

Also, the new fiscal restrictions provided by “Teodorovici Ordinance” have worsened the prospects on trade and current account deficits, which are already steadily increasing, as well as the deficit of the consolidated budget.

Effect of imbalances

Moreover, further severe tax measures are inevitable in 2019, according to a report by Banca Transilvania (BT), issued on Thursday, signed by Andrei Radulescu, Senior economist of the bank.

“For 2019 fiscal year there are signs of budgetary fiscal consolidation, after the relaxation in recent years that has led to a deepening of the deficit (with the risk of exceeding the threshold of 3% of GDP, set by the Stability and Growth Pact),” the BT report said.

The evolution of the Romanian leu was “mainly driven by the challenges from the macroeconomic balances area and the uncertainties in the domestic economic policy, in a context marked by volatility in the international financial markets,” Andrei Radulescu also explained in a statement for Agerpres.

In 2018 Romania recorded the highest current account deficit (4.8% of GDP) among the countries from the region that are also EU members and was also at the top within the EU in terms of the budget deficit (3% GDP), notes the BT report.



  • Current account of the balance of payments (5 of GDP)


In addition, the absence of a draft budget for 2019 contributed to increasing the perception of risk regarding the evolution of the budget deficit in 2019, says Andrei Radulescu.

Depreciation rhythms

The BT report estimates the exchange rate at a maximum of 4.73 RON/euro and an average of 4.71 in 2019, respectively at maximum levels of 4.78 in 2020 and 4.84 RON/euro in 2020.

Estimates were adjusted upwards from the previous central macroeconomic scenario, which saw an average of 4.70 in 2019 and 4.74 RON/euro in 2020.

Banca Comerciala Romana already estimated the exchange rate at 4.77 RON/euro at the end of 2019, even before the comments made by BNR Governor on Tuesday, on the impact of the ordinance, to which he referred by using harsh words, after the monetary policy meeting of the central bank.

A few days before, BCR economists were expecting for RON to “have in 2019 a moderate depreciation trend against the euro (2-3%), explained by the budget deficit, the current account deficit and BNR’s undermined capacity to follow an independent monetary policy.”

Of course, many things depend on BNR’s willingness to allow for larger variations of RON in the market,” wrote Horia Braun Erdei, Chief economist and Eugen Sinca, Senior economist of BCR in a report from January 7.

For its part, BRD expects that RON depreciation “could test the level of 4.70 (RON/euro), and for 2019, the threshold could move to 4.75 in the context of economic problems (a slower economic growth, the increase in twin deficits),” according to a report by the bank’s research department.

After remarking that “the EUR/RON ratio has consolidated above 4.67”, an ING note issued Thursday adds:

“Because this is rather uncharted territory, we would expect for the central bank to improve volatility and enter the market at a certain moment, to indicate the limits of its tolerance.

BNR’s reaction

The new measures that came into effect earlier this year change the data on the two markets – foreign exchange and monetary interbank ones, which are closely correlated and consequently new levels of balance are being sought in these markets,” explained Dan Suciu, the spokesman of the National Bank of Romania, quoted by Agerpres.

Further, the BNR official implicitly confirmed the possibility mentioned above by the ING note, which is allowed by the controlled floating regime of the Romanian currency.

Under the circumstances of maximum uncertainty, BNR’s role is to mitigate the excessive movements that may appear in these markets,” said Dan Suciu.

The BNR official drew attention in this context to the relative stability of the exchange rate registered last year, “following the improvement of some fundamental indicators, such as the inflation rate, as well as a stability in terms of interbank interest rate variation, including a slightly positive margin compared to other markets in the region.”

Mergeți în homepage ›

Publicat la data de 14.1.2019

Lăsați un comentariu


Transport Ministry announces it has sent to Brussels the financing request for Sibiu - Pitesti highway

The Transport Ministry, as the Intermediate Body in Transport, approved the financing request for the project "Construction of Sibiu - Pitesti highway", Sections 1, 4… Mai mult

Romania and Juncker Plan: EUR 720 million attracted, of which 35% by Transgaz for BRUA

(The map of investment financed through Juncker Plan, by GDP share. Darker colours mean higher shares) The operator of national natural gas pipelines, Transgaz (TGN)… Mai mult

Top 3 reasons why young people leave Romania

Lack of trust in authorities, corruption and low living standards are the main reasons why young people leave Romania. The data is part of a… Mai mult

IMM Invest Romania – program implementing rules have been published

The Ministry of Public Finance announces that it has issued the methodological norms for the implementation of the Program for supporting small and medium-sized enterprises… Mai mult

Pollution import and car park expansion: comparisons with the other EU states

Romania is the EU country with the fewest cars in terms of the number of inhabitants, according to data recently published by Eurostat. We appear… Mai mult

Government is trying to save budget deficit: reductions in public administration system, cancellation of bonus for harmful conditions, excise duty on soft drinks

The Government is preparing the public for the first measures aimed at avoiding the budget slippage, which would be applied by the PSD-ALDE government. News… Mai mult

Laura Codruta Kovesi remains alone in the race for European Chief Prosecutor

French Prosecutor Jean-Francois Bohnert will be appointed as head of the European Financial Prosecutor's Office, a position for which he was heard on Thursday, 11… Mai mult

Romania - EU country with highest risk of dying in a road accident, Bulgaria is quickly decreasing number of victims since it built motorways

Romania recorded the highest road deaths in the EU also last year, with 96 deaths per one million inhabitants in 2018, almost double the EU… Mai mult

Latest developments in progress at Health Ministry: Differentiated wages based on performance, competitions organised at a regional level not by hospitals

Sorina Pintea announced on Thursday further new changes that will be brought to the functioning of the health care system, including new rules for employment… Mai mult

ANAF changes selection procedure for liquidators. Main changes

The new order on approval and selection procedures for insolvency practitioners is an important step to a very good direction, industry experts say. ANAF is… Mai mult

Romania loses competition for a seat at UN Security Council. MAE Excuse: Campaign started too late

Romania lost to Estonia in the final vote to get the non-permanent member position within the UN Security Council for the period 2020-2021. On Friday,… Mai mult

Business internationalization / eMAG makes a step to entry five new international markets and targets a business of EUR 2 billion

eMAG hopes to get the opinion of the Hungarian Competition Council over the next two months for the acquisition of Extreme Digital, the market leader… Mai mult

"At a distance from books": 85,000 teachers (one third of educational staff) are graduates of distance learning

Approximately 85,000 teachers are graduates of distance learning (ID) programs, Education Minister Ecaterina Andronescu said at a meeting with school inspectors from Caras-Severin County. The… Mai mult