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BNR: We Have The Least Volatile Exchange Rate In The Region

HOMEPAGE	STIRI	BUSINESS DIGEST	MAJOR COMPANIES	COMPANII	PROFILE FINANCIARE	REAL ESTATE	EVENIMENTE

Stiri	Stiri afaceri	Stiri companii	Evenimente de afaceri

Stiri

Stiri afaceri

BNR: We Have The Least Volatile Exchange Rate In The Region

BNR: We have the least volatile exchange rate in the region

ACTMedia - 31 Martie 2011

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The last quarter of 2010 showed the stoppage of the annual rate of drop of GDP down to -0.6 percent (rhythm three times slower than in the previous interval). This result was given, on the one hand, to the slight quarterly improvement and the basic effect associated to economic contraction in October-December 2009.

As regards the domestic demand, we have diverging evolutions. Thus, the final consumption increased its descending trend ( volume contraction of 2% against 1% in the previous quarter), while the speed for investment reduction was reduced visibly ( from -15.5 percent to -4.7percent), the monthly bulletin of the National Bank published on Tuesday shows. The document explains why food prices went up and as we have the least volatile exchange rate in the region.

As the decline of income available of the population and the persistant reluctance which characterised the banking creditation, the private final consumption accentuated with 0.6 points the annual dynamics in quarter IV ( down to -1.7percent). The main contribution belonged to acquisition of goods from the commercial network, whose contraction was generated by the demand for household goods and some goods of long-lasting duration ( electronics, IT&C, furniture). In the Q4 2010, the final governmental consumption restricted by 4.5% in annual terms, in correlation with the intensification of personnel adjustment in the budgetary sector, the document shows, produced by the institution led by Mugur Isarescu.

Similarly to the other quarters of 2010, the advance recorded by the economy of the main foreign partners reflected in the increase of Romanian exports of goods and services, the data of national accounts for quarter IV showing an acceleration of the real rate of increase ( 5.7 percentage points, up to 17.1%). An intensification of rhythm was obvious on the part of imports ( up to 12.2 %) but its amplitured was less than the in the case of exports, as the domestic offer increased a little both on the segment of intermediary goods ( +1.9%) and some categories of finite products.

evolution of the unemployment rate recorded was severed from the number of employees

The perspectives for the period February – April are favourable. In January, the volume of turnover in manufacturing ( obtained by the deflation of the value of the turnover with the index of production prices) increased by 5.5% in monthly terms, exlusively relying on the domestic market. In the second part of 2010 it has become more evident that the evolution of the unemployment rate recorded was severed from that of the number of employees, January being a new drop down to 6.74%, in the context where the personnel laying off continued during this period as well. The average net income in economy was almost the same in January as compared to the similar period of 2010 ( -0.1%) as the evolutions were of negative sign for the budgetary and the private sector. On the one hand, the annual decline of salaries in the budgetary sector accentuated up to -18.4% ( from -14.8% in December 2010), as the effects of implementation of the law no. 285/2010 annihilated one another – the increase in salry of 15% against the level of October 2010 was counterbalanced by the fact they did not give the 13th salary in January.

annual increase of salaries in the private sector became dynamic

On the other hand, the annual increase of salaries in the private sector was dynamic, the most important acceleration of rhythm being seen in industry and services. The decline of the volume of the turnover in commerce and services slowed down in January up to -2% against the same period of 2010. Similarly to the previous months, the reduction of the volume of sales in the analysed period was due to the evolution of acquisitions in the commercial network less auto ( -5.7% in annual terms) as the contraction of commerce with fuel and that with food. At the same time, the volume of auto sales got better ( +10.7% against +5.2% in December 2010), in the context of finalising , at the end of January 2011 the programme for the renewal of the vehicle lot for 2010.According to preliminary data, the growth rhythm for the value of goods exports accelerated in January, with 9 percentage points ( up to +47.8 % in annual terms). The increase was supported especially by the favourable evolution of the foreign demand for products in metallurgy, chemistry and oil products, the value of the turnover for the foreign market in these sectors increasing with over 50% against the similar period of the previous year. An increase of the rhythm, but not so ample, was recorded in imports – up to +29.4% as compared to the first month of 2010. As a consequence, for the first time in the last 11 years, the commercial balance fob/fob had a surplus ( 91 million euro).

why more expensive food, few stocks and higher imports

The annual rate of growth of prices in industrial production for the domestic market was constant, at 8.4 percent in January 2011, as the pressures associated with the evolution of foreign prices of raw materials. Similarly to the previous intervals, the production prices of intermediary goods kept on an ascending trend, the annual rhythm reaching 12.5 percent. A similar trend was observed in the case of food industry, where the annual rate of grwoth of production prices had an increase in January ( 3% as compared to a monthly average of 1.5 percent in August –December 2010) possible explanations being : diminution of stocks of raw materials and use of imports in a large measure ; dependence on imports in some sectors ( sugar industry), renegotiation of some delivery contracts at year start.

Higher costs with raw materials ( metals) reflected in the dynamics of production prices of goods as well as in the case of capital goods, whose annual variation slowed down in January 2011, possibly as a result of the inhibitating effect of domestic demand. A rhythm slowing down was seen in production prices for energy goods ( -1.5%, up to 8.1%). In January 2011, the annual rate of inflation was 6.99%, dropping by 0.97% against the previous period, as there were favourable effects on the sector of tobacco, fuel and administrative prices products. The current evolutions showed the increase of inflation pressure, the monthly variation of inflation going up to 0.77% ( against 0.53% in the previous month). The main factors in this sense were the domestic offer which was insufficient in vegetables and fruit, the growing tendency of the prices of food raw materials at global level, as well as the increase of excises in fuel.

volatility of the exchange rate was the most reduced in the region

The exchange rate leu/euro continued over the first part of January the slight drop initiated in the last part of December, and the volatility of the exchange rate was the most reduced in the region. The evolution reflected the relative improvement of the feeling on the international market given by : the succes of the bidls and bonds organised by the issuers in Portugal, Greece, Spain and Italy and the perspective of a reform of the European fund for financial stability ( EFSF) aiming at the increase of the area of coverage and its dimension. The influence of the foreign factors was calmed down by the decision of the IMF board on 7 January to approve the release of the last but one part of the loan granted to Romania and the evaluation presented in the new report drawn up by this institution.

The descending movement of the leu/euro exchange rate was interrupted in the second part of the month, as the improvement of the perception of investors was limited in a certain way by the persistance of the uncertainties regarding the rhythm of the continuation of fiscal consolidation and structural reforms, depending on the results of negotiations underway regarding the signing of a new agreement with EU/IMF ; as a result, the appreciation rhythm of the leu ( 0.7%) was inferior to that offered to the other currencies in the region. Even so, the interest of the residents for the domestic financial market increased in January, as a result of the increase of attractivity in bonds, as well as the listing of fondul proprietate with BVB.

average yields for new deposits of non-banking clientele diminished

Showing the drop in representative quotations of the interbanking monetary market, average yields for new deposits in the case of non-banking clientele in January, both on the non-financial companies sector (-0.21 percentage points,up to 5.15%) as well as that of population ( -0.43% up to 7.19%). A descening adjustment was seen in the average rate of the interest for new credits given to non-financial companies ( -0.26% up to 9.25%) ; in exchange, in the case of population, it recorded an increase ( +0.81% up to 12.49%), induced mainly by the increase in the interest rates practiced by some banks for new consumption credits.