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Dumitru (Raiffeisen Bank): Exchange rate has depreciation tendency on background of commercial deficit deterioration
The leu has a depreciation tendency against the euro on the background of deterioration of fundamental factors of commercial deficit, said the chief economist of Raiffeisen Bank, Ionut Dumitru.
“I don't know whether it is connected to the political situation. My opinion is that we should not look for relevance in the latest spectacular movement. The exchange rate depreciation is not new. The rate has a depreciating tendency on the background of the deterioration of the fundamental factors of the commercial deficit. We have one of the highest current account deficits in Europe and this imbalance is due mostly to the budget deficit. Practically we have a situation of twin deficits: current account deficit generated by a high budget deficit and we do not have, for the time being, any clarity about the fiscal budget policy and its adjustment, because we are in an election year and we do not have many signs showing that adjustment will begin,” Dumitru said.
He mentioned that if we look over EC projections we can see an estimated deficit of 7% for next year in a scenario where fiscal budget policies do not change.
Asked whether we could see other depreciations of national currency, Dumitru said the bank estimates an average exchange rate of 4.85 lei/euro.
At the end of January, financial analysts of CFA Romania anticipate a depreciation of the leu in the next 12 months, to a rate of 4.8823 lei/euro, and an increase of exchange rates for short and long periods of time.
“As for the euro/ron exchange rate, about 90% of participants estimate a leu depreciation in the next 12 months (compared to the current value). So, the average value of anticipations for 6 months is 4.8286, while for 12 months the average value of the anticipated rate is 4.8823,” CFA Romania said in a press release.