Sources cited by Economica.net estimated that Romania should have a designated government by October 16-17 in order to be able to issue FX bonds by November 7. Given the high level of US bond yields, Romania is expected to seek financing on other markets, including Europe and possibly Asia, such as Japan, the same sources said.
The Romanian leu has continued to depreciate, with the euro crossing the RON 5.35 level from below RON 5.25 during the summer, following a sharp depreciation episode after the third attempt to form a government failed in Parliament on September 30.
In its Macroeconomic Outlook for 2027, CFA Romania’s analysts and survey respondents expect the leu to reach RON 5.4-5.5 per euro, with slightly higher depreciation risks towards the end of 2027.
“This is an orderly depreciation, in the context of risks related to fiscal credibility and external shocks,” the CFA report said.
Since last year, the leu has been on a nominal depreciation trend, which CFA specialists expect to continue. Thus, the leu is expected to depreciate by 2%-3% per year in the coming years. In real terms, however, the leu remains appreciated. Some market participants argue that an exchange rate of RON 5.5 per euro is therefore not that far away.
In a recent report for investors, ING Bank said that “the central bank seems increasingly willing to allow greater flexibility in the EUR/RON exchange rate, which adds additional upside risk to this currency pair”. This is precisely what has happened since then, with the leu weakening further against the euro.
Leave a Reply