The Romanian currency continued to fall sharply against the euro for the second day in a row, after the Government adopted several fiscal changes on Wednesday, some of which impact banks and multinationals in Romania.

The euro reached RON 4.64437 on the interbank market yesterday afternoon, its highest level after the 2005 denomination. The previous record had been set in July 2012, when the euro was quoted at RON 4.63749 on the interbank market.

Romania’s National Bank (BNR) yesterday announced an official exchange rate of RON 4.6279 for one euro, up 0.18% over the previous day, after a 0.5% increase in the previous day.

The US dollar also appreciated against the leu reaching an official rate of RON 3.9865, up 0.18% over Wednesday.

The Romanian currency has been on a downtrend against the euro since the beginning of this year. The exchange rate has increased by 2.6% since the end of January, when the EUR was quoted at RON 4.5038.

BNR governor Mugur Isarescu said yesterday that the local currency’s depreciation is caused by Romania’s increasing trade deficit. He explained that, unlike Hungary and Poland, Romania has a more accelerated growth in imports than exports, which puts pressure on the exchange rate.

Economist Ionut Dumitru, the president of the Fiscal Council, also said that the leu can’t recover unless economic fundamentals improve, which would require lower trade and current account deficits as well as lower budget deficit.

editor@romania-insider.com