The EUR/ROL exchange rate will stabilise within approximately two months and will fluctuate within a given margin, however it would be wrong for the central bank to identify an exchange rate that would provide balance, said central bank governor Mugur Isarescu on Tuesday. Together with prime-vice-governor Florin Georgescu and vice-governor Eugen Dijmarescu, Isarescu was summoned by the Chamber of Deputies economic policy committee to explain the recent moves on the forex market and address criticism from the business community following the large exchange rate fluctuations.
Last week the euro dropped sharply towards 35,000 ROL. It then climbed rapidly to over 38,000 ROL but by Friday was back to 36,000. This generated market confusion.
"The National Bank has nothing to do with the appreciation of the ROL, but is doing everything it can to make sure it is sustainable," said Isarescu. He added that he understood the difficulties Romanian exporters and producers were facing. "We know they are under extreme pressure, but this is not caused by the bank but by the conditions of the integration process, one of the likely outcomes of which is unemployment."
His statements were backed by vice-governor Eugen Dijmarescu. "The idea that the NBR has withdrawn from the market is false. In less than two months of this year, we have bought as much foreign currency as during the whole of last year," said Dijmarescu.
NBR officials assured Deputies they were closely monitoring market developments. "This does not mean we can go on supporting the exchange rate since this is increasingly costly, and you'd only come and ask us where the money is," said prime-vice-governor Florin Georgescu.
The NBR governor added that he wished to encourage a public debate that would lead to the setting of a margin for the exchange rate. He also believes that the strengthening of the domestic currency is harming people with foreign currency-denominated deposits, but maintained that this was "unavoidable".
"We have entered the period of cheap capital. The ball is not only in the NBR's court, but also in that of the entire economy. The solution is to be prepared to receive this money," explained Isarescu.
Among the most important sources of foreign currency inflows he mentioned the extremely high level of foreign investment, remittances by Romanians working abroad and foreign loans, including those of banks.
"Investment will rise in 2005 and 2006, but there's no possible way to discourage this. The important thing is that the proportion of speculative capital remains low," said Isarescu.
mirela.luca@zf.ro ; razvan.voican@zf.ro
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