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BNR Governor vows RON will recover, national currency hits 3.7619/EUR

The Governor of the central bank, Mugur Isarescu, says that the national currency will get stabilized. The National Bank fights the excess of liquidity on the market. A painful habit is to concentrate the budgetary expenditures in the last two months of the year, he warns.

Bucharest – The national currency depreciated strongly yesterday against the Euro, rising to RON 3.7619, up 4.17 bani over the previous day and reaching a new maximum of the last three years. This level has not been reached since January 28, 2005, when the Euro was rated at RON 3.7723. Thus, if at the debut of the interbank session of yesterday the rate was RON 3.7500/EUR, in the first two hours the exchange rate rose to a maximum of RON 3.7910-3.7960/EUR, while at 13.18 h. the quotations returned to RON 3.7535-3.7570/EUR. At the same time, the USD rose 2.64 bani over the previous day, to RON 2.5958, while the gold gram became 22.37 bani cheaper, being rated at RON 71.9908. The Governor of the National Bank of Romania (BNR), Mugur Isarescu, declared yesterday on the occasion of the presentation of the revised variant of the “National Durable Development Strategy,” that the central bank manages with difficulty to attract the excess of liquidity from the monetary market, resulted after the important budgetary expenditures from the last two months of the past year. In this situation, according to Isarescu, BNR could opt even for two sterilization operations per day, “which must be regarded in dynamics, not in an immediate and direct correlation with the evolutions of the rate.” The Governor of the central bank pointed out that the deposits attracted from the market by the Ministry of Economy and Finances (MEF) cannot be considered sterilization operations, because the amounts are collected in order to be spent, and thus reintroduced in the interbank market. Referring to the evolution of the RON, Mugur Isarescu believes that it has the force to revive and, from a certain moment, it will recover. “It is obvious that the RON had to suffer from the tumult from the international markets and from the domestic market. However, the national currency will stabilize and even will revive, after the marked depreciation from the past two months, which was determined both by outflows of volatile capital, but especially very important budgetary expenditures,” pointed the same. The Governor of the central bank agrees that outflows of volatile capital take place, reflected especially by what happens on the capital market from Bucharest, but these evolutions take place on the background of a “weakness” of the Romanian economy, namely the massive spending of money at the end of the year. “It is a painful habit to concentrate the budgetary expenditures in the last two months. The Finance Minister pointed out that over one per cent of GDP was spent at the level of the local authorities. Spending such amounts in only ten days has an impact on the foreign currency market,” explained Isarescu. He declared that without these amounts launched on the market at the end of the year, the RON would not have been depreciated so much. Also, considers Isarescu, the private circles had a significant contribution in this respect through the consumption at the end of 2007, when the cash in circulation in December increased by around 30 per cent. The environment and energy – two hard problems Referring to the revised variant of the Durable Development Strategy, at whose presentation President Traian Basescu and other Romanian officials were also present, Mugur Isarescu stressed that BNR will bring its contribution to the successful enforcement of the project for the development of Romania, being interested in the medium and long term development. According to Isarescu, the programmes initiated for this purpose must be sustained through public debates, with the participation of decision-making factors and beneficiaries and “to be removed from the political cycle.” Isarescu gave the example of the economic development strategy elaborated by the Government which he headed and which “should be an example, because it continued to be implemented also by the two subsequent Governments.” During the same event, the Environment Minister, Attila Korodi, declared that in 2020 Romania wants to reach the level of environmental quality registered by the other EU countries in 2007, and in 2030 to catch up. Present at the event, President Traian Basescu criticized the Government because “it failed to answer a question formulated in a CSAT meeting last year about the domain of energy. According to Basescu, CSAT discussed in a meeting the problem of energy, on which occasion it wondered whether the existence of a major state company in this sector may bias the market, a question which remained however without an answer. Giving the example of the domain of energy, President declared that “biased markets” continue to operate in Romania. On another hand, President declared himself satisfied that the “revision, implementation and monitoring of the Strategy became the clear responsibility of the Government.” Sursa: http://www.nineoclock.ro

Tags: declared development which market isarescu governor national currency bnr euro

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