The autumn of 2004 will not bring the usual seasonal pressures affecting the domestic currency's exchange rate, as long as the factors fighting against the ROL's depreciation outnumber and outpower those factors that, theoretically, could be responsible for a weaker national currency. Of course, this scenario is likely to surface only if the central bank decides not to teach a lesson to those with loans in foreign currencies and provoke the depreciation of the ROL, in the absence of other barriers that could stop people's ravenous appetite for euro and USD loans.
The ROL yesterday gained 19 units against the euro as compared to its quotations from earlier on in the year (41,117 ROL/EUR), whereas the national currency's depreciation against the US dollar did not exceed 2.9 percent.
But how do banks see the end of this year? ABN Amro forecasts a 42,061 ROL/EUR exchange rate, ING expects 42,200 ROL for one euro, whereas BRD (The Romanian Development Bank) sees the euro somewhat stronger, up to 42,500 ROL.
"There is no way any pressures leading to the ROL's depreciation will emerge in the next nine months. Perhaps next spring," one dealer said.
A significant factor supporting these estimates comes in the form of foreign currency inflows, which remain high. Although the forex market this month posted deficits of up to 50 million euros in one week, players say that these are only temporary and will certainly pass.
"One factor working against the ROL's depreciation is the cut in the budget deficit target for the ongoing year, which will push down the potential pressures triggered by the money spending trends that generally emerge towards the end of the year. Then, imports of energy are financed from loans, which means they are not passing through the forex market, and the National Bank's reserve is, at any rate, comfortable enough to avoid pressures such as those that occurred in November 2003," said Marius Stoica, deputy manager of BRD's Market Operations Division.
"Compared to the previous years, the ROL's real appreciation stems from foreign currency inflows. Even if temporary deficits do occur on the market, the trend is not changing. I doubt there will be any depreciation pressures in November-December," explained Cristian Sporis, treasurer of Raiffeisen Bank.
It is clear that foreign currency inflows have been steadily growing this year: the National Bank alone bought 2.2 billion euros in eight months. The central bank has in fact been practically fighting to depreciate the national currency, which posted growth trends even in nominal terms, in the absence of interventions.
The fluctuations in the ROL/EUR exchange rate occurred in an ever narrower band, with bigger oscillations posted only in the case of the US dollar.
Seasonal imports occasioned by the winter holidays may drive foreign currency demand up, especially since consumer lending is expected to surge again, following the rate cuts for ROL-denominated loans. However, the increasing demand could only "correct" the real appreciation of the ROL, which was near the ceiling of the 2-4% cap indicated by the central bank, against the EUR/USD basket.
razvan.voican@zf.ro
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