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Soc Gen: Investors should buy Romanian lei

Investors should buy Romanian lei on the background of speculations that the currency will return to the lowest record level, since political unrest in Romania is quieting down, allowing the introduction of austerity measures and international financing, analysts of the French Bank Societe Generale announced on Tuesday.

Analysts recommend buying lei, anticipating that the currency will appreciate to 4.2 lei/euro. On Tuesday morning the leu dropped to 4.3905 euro, and then appreciated by 0.4% to 4.3504 euro at noon. The leu appreciated by 0.4% against the dollar, reaching the lowest level since the fall of communism in 1989.'As the government survived the motion two weeks ago, it is unlikely it could fall now for the same reason, the reduction of budget deficit. The road to reform is a bumpy one and there will be a difficult period but there is no alternative to the IMF program,' Societe Generale analysts say.

The leu considered 'very attractive'

Risks are limited by the probability that the National Bank of Romania should intervene in the currency market to limit the depreciation of the leu, the analysts say.The Romanian finance minister Sebastian Vladescu declared on Tuesday that Romania 'does not have liquidity problems' and the country would not request another budget deficit target from IMF.

6.8% of GDP deficit target established with IMF can be achieved

A report of the Finance Ministry published on Monday shows that the budget deficit for the first five months of 2010 was 3.1% of GDP, which shows that the deficit target of 6.8% of GDP established with IMF can be achieved, an analysis of the French Bank Credit Agricole shows.The German bank Commerzbank said the decision of Boc's government to increase VAT will deepen the recession facing Romania and will lead to the significant increase of inflation and the deficit target is not likely to the reached. The German bank reduced its estimate on economic growth in 2010 to 0.3% from 1%. 'Political uncertainties will probably lead to the increase of leu volatility in the weeks to come. If the opposition can overthrow Boc's government the savings plans will be dropped. This evolution will make the IMF aid come again later on' the analysts of Commerzbank quoted by Bloomberg show.

Sursa: http://www.actmedia.eu

Tags: deficit should analysts romanian euro

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