The euro went up to a new all time high yesterday, reaching arate calculated by the NBR at 4.3257 RON, thus continuing the risestarted at the end of last week, when the decision of theConstitutional Court disallowing the 15% pension cut upsetGovernment's plans to adjust public spending.
In only two days, the RON lost over 2% against the euro, but theexchange rate increased amid "insignificant" traded volumes. Theeuro rose to almost 4.34 RON on the interbank market.
This time, the exchange rate increase did not make the NationalBank intervene as it did last year, when the market's attempts totake the euro to over 4.3 RON were swiftly offset by sales offoreign currency through local banks.
Thus the question of the day is whether this is a brief 'foray'of the euro into the above 4.3 RON territory or the NBR is allowingthe exchange rate to resettle on a higher position.
"I see it as a temporary move of the market, a response to thedomestic factors and the foreign climate. The significant impactcame from the delay of the IMF loan tranche (which should have comeon July 1 i.e.)," says Georgiana Constantinescu, Credit Europe Bankanalyst.
A weaker RON would be a breath of fresh air to exporters, hit bythe increase in manufacturing costs as a result of the VAT hike,but would make life harder for those who borrowed in foreigncurrency.
At any rate, dealers and analysts see only a limiteddepreciation of the RON possible, with a new balance level at 4.4RON and will not consider spikes of 5 or 6 RON as mentioned inpublic discussions.
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