Despite the country being under scrutiny from the rating agencies, there is still room for interest rate cuts, according to the head economist of Romanian bank BCR, Ciprian Dascalu.

The local currency "seems a little overvalued," he explained, Ziarul Financiar reported.

The exchange rate is expected to continue sliding towards weaker local currency, possibly reaching the [average] value of RON 5.05 / EUR in 2022, while interest rates will continue to fall in 2021, said Dascalu in a video conference.

"Interest rates are likely to continue to fall this year. The National Bank of Romania (BNR) remains quite sensitive to the exchange rate. We expect a slight and gradual depreciation of the local currency, which seems a little overvalued."

For the end of 2021, BCR projects an exchange rate of RON 4.95 RON / EUR.

Ciprian Dascalu also explained that the dynamics of Romania's exchange rate over the last seven years looks like a tunnel that is getting narrower and narrower.

andrei@romania-insider.com

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