Economy

Romanian currency hits new low vs. euro on 40% pension hike

Romania’s currency, the leu (RON), hit an all-time low versus the euro last week, reported the Agerpres news agency. According to the exchange rate published by the National Bank of Romania on September 23, one EUR equaled RON 4.8641. This depreciation of the Romanian currency was in fact small, only 0.1 percent. But it was enough to push the exchange rate over RON 4.86 for 1 EUR. On September 22, the EUR/RON rate had been 4.8590, with the euro quoted in interbank transactions as between 4.8576 and 4.8670 lei. Meanwhile, another new low was hit on September 25, with the National Bank of Romania quoting the EUR/RON at 4.8750.

The Romanian currency has weakened versus the USD as well: On September 23, the exchange rate was RON 4.1529 for 1 USD, a decrease of 0.3 percent compared to the previous day, when the USD/RON rate was 4.1404.

The most prominent Romanian financial magazine, Ziarul Financiar, found there was a strong correlation between the underperformance of the RON and the fact that the Romanian Parliament had endorsed a draft bill for budgetary adjustments. According to the modifications included in the draft, pensions in Romania will receive a 40 percent hike to be implemented retroactively starting September 1.

Central bank spokesman Valentin Suciu had earlier warned parliamentarians that a further weakening of the Romanian currency could be forestalled only by “avoiding public policy derailments that result in more unmanageable expenditures, for instance, by raising pensions or wages.”

The EUR/RON stood at 4.8738 on September 29.

Title image: Analysts correlate the depreciation of the RON versus the EUR to the pension hike endorsed by parliament last week

Source: romaniajournal.ro  

Author: Éva Zay