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Business analysts about leu's strengthening in the past days

The European single currency on Thursday was traded for RON 4.1020, according to the exchange rates issued by the National Bank of Romania (BNR), which means the lowest value of the euro against Romania's national currency, the leu (RON), in the past 11 and a half months.

The leu has strengthened against the US dollar as well, with the RON 2.9046 to the US dollar posted by the BNR being similar to the one of January 2010, when the US dollar was traded for RON 2.9043, Jurnalul National reports.

'There are two explanations for why the leu is strengthening. The first is related to the domestic situation, with an economic faring better than expected, ever-improving prospects and a foreign trade surplus in January. On the other hand, the external situation also helps us. Central and Eastern Europe is starting being better perceived than other areas, as there are capital outflows from conflict areas searching for opportunities,' the paper quotes BCR-Erste senior economist Lucian Anghel as saying.

On the other hand, Banc Post senior analysts Dan Bucsa says the leu has always strengthened against the euro on the first months of the year ever since 2005, when capital accounts were liberalised.

'I do not belive 2011 is out of the pattern of the past years. Foreign banks are attracted by the high interest paid on RON-denominated deposits, while capital inflows are reducing the exchange rates. These inflows can change direction any time the foreign banks feel the appreciation potential has been exhausted,' says Bucsa.

While most of Romanians are glad that their loan repayments or home rents are smaller, business analysts seems rather worried. They believe this rise was too soon and artificial and that could unsettle the modicum of economic recovery in Romania, the paper remarks.

'The exchange rate I saw for today reads RON 4.1 to the euro. This is rather small and could come back to haunt exporters. I believe a balanced exchange rate that would help exporters and not suffocate the economy ranges between RON 4.1 - RON 4.3 to the euro. If the appreciation trends continue and the rate goes below RON 4, things will look bad,' BCR-Erste's Anghel explains.

Chairman of the National Association of Romanian Importers and Exporters (ANEIR) Mihai Ionescu says the sudden appreciation of the leu against the euro is a real financial tsunami that risks bankrupting the nearly 20,000 Romanian companies producing for exportation. He estimated at 100 million euros the losses incurred last month by the appreciation of the leu from a RON 4.27 to the euro rate to RON 4.1 to the euro. 'Any fall below the RON 4.1 mark will mean exporters will go bankrupt because RON 4.1 is the threshold below which exports become inefficient,' Ionescu says.

Sursa: http://www.actmedia.eu

Tags: euro analysts bcr bnr

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