Local currency and stocks plunge as investors fear tax increases

The EUR/RON exchange rate surged by 1,17 percent today, to a rate of 4.2808 RON/EUR, while the USD was quoted at 3.4911 RON, 1.38 percent higher than the previous day, after the Romanian Constitutional Court ruled that the 15 percent pensions cuts announced by the Government are not constitutional. The Bucharest Stock Exchange witnessed one of the highest losses in the past 6 months, as the BET index plunged 4.8 percent, and the BET-FI index, which reflects the evolution of the financial investment companies (SIF), lost 9.4 percent. Investors fear that the Government will have to renegotiate the financial aid package with the International Monetary Fund (IMF) and to accept tax increases. Read more about the Constitutional Court ruling here.