NBR has kept the RON on a tight leash, though at the cost of heavy interest fluctuations

The Romanian currency has been much more stable against the euro during the almost five months of the year compared with its peers, the Polish zloty and Hungarian forint, but the dampened exchange rate came at the cost of higher interest fluctuations on the domestic currency market compared with those of Budapest or Warsaw. The three currencies still had correlated trends, though, and visibly rose against the euro in April, after which they, however, came under pressure again amid investors' concern regarding possible contagion from the Greek woes. Domestic banks' dealers and analysts believe there is a sole explanation for the relatively low exchange rate vacillations on the Bucharest market, the national bank's silent interventions. The NBR pursues a policy of controlled exchange rate floatation, though it made steps toward flexibility in 2004. "For us, exchange rate stability is more important than interest rate stability. The major difference is given by the exchange rate impact over inflation and financial stability. The weight of foreign currency lending is very high domestically," says Ionut Dumitru, chief-economist of Raiffeisen Bank.