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Retrospective 2021 : Autumn with growing interests and inflation ; the leu/euro exchange rate depreciated to a record level


The autumn of 2021 brought a wave of increase of the interests, the National Bank increasing twice the key interest by 0.25 percentage points, the price for natural gas, fuel and electricity rekindled inflation, and the foreign exchange rate leu/euro went up to a new historic maximum.

The leu depreciated by comparison to the main foreign currencies

At the beginning of the year, on 4th January the exchange rate euro/leu was at the level of 4.8691 lei per euro, this being a new record of the single currency by comparison to the leu. After this date, the leu got on a decreasing trend, but at the end of March the national currency surpassed the level of 4.9 for one euro. When this level was reached, the exchange rate did not go under 4.9 lei.


Thus, by comparison to the euro, the leu depreciated to the value of 4.9495 lei for one euro on 22nd September 2021. Over the last months of the year, the national currency situated between 4.9460 – 4.9490  lei/euro being very close to the maximum level previously mentioned.


Adrian Vasilescu, consultant on strategy with the National Bank of Romania (BNR) stated at the beginning of July that the national currency depreciated in 12 years and a half by 90 bani, and the foreign currency market of Romania is very stable.

He added that ‘ over these twelve years and a half very many analysis and influence centres on the foreign currency market estimated that the leu would go over the threshold of five lei, which did not happen.’

‘For the last ten years, year in year out there has been estimated the surpassing of the threshold of five lei which has not happened until now’ Vasilescu said.

As regards the exchange rate leu/American dollar, this was situated at the beginning of the year at the level of 3.9609 lei/dollar, and the highest quotation of 2021 was recorded on 24th November, 4.4127lei/dollar respectively.

A Swiss Franc was quoted at the beginning of the year at 4.5036 lei/Franc and on 3rd and 17th December went up to 4.7595 lei/Franc. The level of 4.7 lei/Swiss Franc was reached first on 17th November in 2021 when a Franc was quoted at 4.7016 lei.

BNR increased the monetary policy interest

In autumn, the interests started to grow, and BNR started to increase the monetary policy interest.

The ROBOR indicator for three months, which decides the cost of consumption loans in lei with variable interest, started to go up on 24th September 2021, getting to 1.65% from 1.61% in the previous meeting. The indicator was between 1.60 and 1.61% between 23rd August and 3rd September.

At the beginning of 2019, the ROBOR indicator for three months was 2.99% per year and at the beginning of 2020 it was 3.19%. On 4th January 2021, the ROBOR for three months was 2.01%. On 21st December 201 the indicator was 2.93%.

In October, the Board of the BNR decided to increase the key interest to 1.5% per year, from 1.25%, the increase of the interest rate for deposit to 1% per year and the rate of the interest for lending (Lombard) to 2% per year.

In November, the Board of the BNR decided to increase the key interest starting with 10th November to 1.75%.

Growing inflation in autumn

In autumn, not only the foreign currency exchange rate and the interests reached high levels, but the inflation was at high rates, getting to 7.9% in October 2021, from 6.3% in September so that in November got lower down to 7.8% in November.

The annual rate of inflation IPC is projected at 7.5% in December 2021 and is meant to slow down to 5.9% at the end of next year, according to the report on inflation of the BNR.

BNR mentions that against the report of August the new projection is higher by 1.9 percentage points for the end of 2021 and by 2.5 percentage points for the end of 2022. From these revisions, an important part is explained by the contribution of the increasing consumption basket which is outside the monetary policy.

According to the quoted source, the recent behaviour of the monetary policy of BNR was meant to be prudent, in order to bring back and keep on an average term the annual rate of inflation in line with the stationary taget of 2.5% of the percentage point, including by controlling the inflationist estimate to the longer horizon of time, so that it could contribute to the sustainable economic growth in the context of the fiscal consolidation process and conditions of protection for the financial stability.

According to BNR, the future evolutions of the price of energy goods continue to represent the main risk factor for the projection of the annual rate of IPC inflation. The configuration of the prices for these products, namely the way in which they will appear in official statistics, could be influenced by the relative importance of the compensation/ceiling/subsidies in the total of the framework of assistance offered to household consumers during the period of time for which they are implemented.

Similarly, the configuration will depend on the rapidity of the harmonization, in the future, to European standards of diminution of the polluting energy sources, with direct impact on the price of energy en detail for household users.

On a short term, the dynamics of these markets is under the sign of evolution characterized by volatility.

According to BNR both on a foreign plan and most importantly on a domestic level, there are uncertaintiles associated to the evolution of the crisis of public health, as increased contagiousness  of the Delta viral stem overlaps the slow process of immunisation of the population in Romania.

‘ Any lagging behind with persistant character of the medical situation in Romania as compared to the situation of the countries in Western Europe could bring asimetries in the plan for economic recovery, with impact on the growth potential of the economy on medium term. In exchange, once the publication of the final version of the National Plan for Recovery and Resilience of Romania, the absorption of a high volume of European funds could support the economy on several levels: financing of the account deficit from stable funds sources (NGEU), boosting, on medium term, of the investment process or the facilitation of the transition to a growing model of the economy based on the technologies of the future: digitization and green economy’ the Report says.