Romania’s currency records one of the deepest dives in the region this year

The national currencies of Turkey and Romania start the second quarter at the bottom of the emerging-market pack outside Latin America, Bloomberg reported, according to Yahoo Finance. The most-accurate forecaster for the region, Marcin Lipka, a senior analyst at Polish brokerage Cinkciarz.pl, says they’ll end the year even weaker, according to the same report.

Romania’s currency lost 2% year-to-date to the euro, and Lipka expects another 5% weakening over the next year. This would bring the EUR close to RON 5.

There is a general consensus among analysts regarding the Romanian currency's imminent re-alignment toward weaker levels, revealed by CFA polls. However, Romania's National Bank - BNR's rhetoric hints to a certain resistance to such corrections in terms of both exchange rate and interest rates.

“We expect a wider depreciation to be deliberately mitigated by the central bank,” BCR chief economist Horia Braun commented after the April 2 monetary policy board.

Unsupported rumors link BNR’s rhetoric to a benevolent policy towards the ruling coalition, under the circumstances of the term of the BNR governor Mugur Isarescu expiring this autumn. Deferred corrections would be, however, more costly for the economy, as BNR has warned itself in the past.

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