The Romanian national currency, namely the leu, depreciated to historic low against the euro today, June 28, 2010. The exchange rate set by the Romanian Central Bank (BNR) reads 4.3257 lei per euro. BNR governor adviser claims this is not the real trend.
The leu depreciated below the psychological line of 4.3 lei due to instability and uncertainty. Dealers say that BNR did not intervene on the market but because important BNR manager Eugen Radulescu (ex-CEC manager) saying it was not impossible for the leu to fall to 6 lei per euro, the result was a very strong psychological impact.
The exchange rate will see such changes until the IMF will communicate the situation of the fifth instalment and the political and economic environment calm, a commercial bank dealer said. Another one tagged the BNR manager's statements as "irresponsible" and "unacceptable". "In any other country, he would have been sacked, but I don't think it will be the case with us. (...) How do you expect the market not to react to something like this?", he complained.
"The freezing of the IMF agreement, plus a possible paralysis of the political decision might bring it to ruins. 5-6 lei per euro, maybe even worse", BNR manager Radulescu declared.
BNR priced one euro with 4.3257 lei on Monday, after the exchange rate on Friday went up to the highest 2010 rate and in the last seven months, following the Romanian Constitutional Court verdict on the austerity measures adopted by the Government. At 13:50 o'clock, the euro quota on the inter-banking market was 4.3331 lei.
BNR governor councillor Adrian Vasilescu claims that "the leu is not crashing" and the historical exchange rate expresses a psychological shock. On the other hand, he told Antena 3 TV reporters this did not mean that it was going to be the trend from now on.
He spoke on the increase in VAT and said it should not be calculated arithmetically and that the inflation will not increase by 5%, the same percentage that will push the new VAT in Romania to 24%. "In reality, things will have a different turn, since it's about two factors that annihilate each other: the rise in VAT, which pushes up inflation, and the reduction of the consumption demand with prices going up and with employees in the public sector seeing their salary decreasing", Vasilescu said.
Vasilescu added that "no one" asked BNR whether to increase the VAT or not. According to him, BNR did not wish for such a measure. Asked why BNR did not interfere on the market when the euro went above 4.3 lei, Vasilescu claimed this was a matter of "possibility and opportunity".