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