Discussions on the economic situation in Romania
The Romanian currency (leu) continues to depreciate against other foreign currencies.
Mihai Pelin, 08.05.2025, 14:00
In Romania, the euro has reached a new historical high. The National Bank announced on Wednesday an exchange rate of 5.0991 lei for one euro. Thus, the psychological threshold of 5 lei was exceeded for the second consecutive day, amid the uncertain political situation. The leu also lost ground against other currencies, and the price of a gram of gold also recorded a new high, exceeding 487 lei. On the stock exchange, the situation has calmed down, however, ROBOR, the reference index for interest rates in lei, had a significant increase and reached the highest level in the last almost two years, 6.47% per year.
The Central Bank intervened on the foreign exchange market, but the pressure towards the depreciation of the leu is very high, according to analyst Dragoş Cabat “The exchange rate was maintained by the National Bank of Romania (BNR), on Monday, but then on Tuesday they saw that it would be a much greater effort to further maintain it. They will probably intervene again, not now, but in a few days, maybe even next week, and they will stabilize this depreciation of the exchange rate a little.”
In this context, the Finance Ministry requested all state institutions that the payment of pensions and salaries be treated as an absolute priority every month. The document signed by interim minister Tánczos Barna specifies that other expenses will be accepted for payment only after covering the obligations regarding personnel rights and social rights. He said that Romania’s economic situation is difficult, but manageable. In his opinion, the economy is robust and resilient and will overcome this situation. Tánczos Barna: “The developments in the last few days were practically generated by the elections on May 4. What I can tell you from the very beginning is that both the Finance Ministry’s buffer and the BNR reserves ensure that the situation is manageable.”
Tánczos Barna says that the budget deficit is currently within normal parameters and claims that Romania can meet the 7% target if it achieves the forecasted revenues. The depreciation of the leu will be seen in increases in interest rates on foreign currency loans, but also in higher prices for various products and services, such as gas, fuel, telephone services, which will subsequently translate into higher inflation. Economic analyst, Aurelian Dochia, believes that what is happening on the financial markets should not be considered unusual and that these signals must be taken into account. Aurelian Dochia: “Indeed, Romania has some very serious macroeconomic problems that need to be solved, regardless of who will be in charge in the coming period, both at the presidency level and in the government area, and the main problem, obviously, is that of the very large budget deficit.”
Aurelian Dochia explained that there is a slowdown in economic growth both in Europe and in Romania, but also turbulence and uncertainty related to the restructuring that will occur in international trade. (EE)
