After one month of stunning appreciation of the ROL, confusion and disorder may start taking their toll on an economy caught off-guard by the strengthening of the domestic currency by nearly 20% in real terms.
The most painful effect is being felt by the companies that have to collect payments in foreign currency contracted before the turning of the tables on the forex market. They are now paying a heavy toll for their habit acquired through the years, of preserving the value of a contract by tying it to a foreign currency.
The worst blow was dealt to the profits of companies that collect payments in foreign currency or calculated in foreign currency equivalent and have to make payments in ROL. Losses are even greater considering that such ROL appreciation, of 5.6% against the euro and 8.6% against the dollar in only one month, was almost impossible to anticipate.
The ROL appreciation is known to affect the revenues of exporters first. On the other hand, the importers' margins go up, as they maintain prices in ROL yet spend less on the foreign currency they need to make purchases.
"The recent development of the ROL exchange rate is positive for imports and negative for exports. The upside is that the exchange rates' progress is relatively stable, which I believe will continue over the next period," said Paul Nuber, chief executive of Nestle Romania, the subsidiary of the Swiss foods producer. Nestle Romania exports about 20% of the Joe wafers made in Timisoara. Nuber says the ROL's appreciation came amid short-term speculations. "The short-term interest rates for ROL are much higher than inflation, which makes players sell euros and invest in ROL for short-term," he added. Nestle Romania expects turnover to be of more than 50 million euros this year.
"The euro and dollar depreciation makes a negative impact on our business, because about 60% of the output is exported, mainly to the European Union countries. I cannot tell how serious the loss is at the moment, but anyway, we have no safeguards in place," said Andrei Menhardt, chairman of furniture producer Silvarom Bucharest. The company posted some 10% turnover growth in real terms for the first nine months and expects full-year turnover of about 20 million euros.
Once the impression created that the euro and especially the dollar collapse does not seem to come to an end, people see themselves pressured by the urge to dump their foreign currency savings as fast as they can, even if this means significant losses. And this introduces another painful aspect of the market's growing accustomed to a new development of the ROL exchange rate.
A particular situation caused by the spectacular plunge of the euro on the market in Bucharest is that some commercial banks, which have their share capital deposited in foreign currency, find themselves no longer complying with NBR's minimal requirements.
razvan.voican@zf.ro ; ionut.bonoiu@zf.ro
georgiana.stavarache@zf.ro
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