Romania Leu’s Exchange Rate Hits New 4-Mo Low At 4.1874

The leu’s reference weakened 0.1% from 4.1833 per euro on Thursday.

Against the US dollar, the leu’s indicative fell 0.28% at 3.2851, from 3.2759 a day earlier. It is the weakest rate since March last year, when the leu traded at 3.2883 to the greenback.

Romania’s currency opened lower against the euro Friday, after a strong depreciation Thursday night following a 9% fall in the US Dow Jones industrial average most likely caused by program trading.

The leu opened at 4.21/4.215 per euro, from 4.1785/4.18 per euro at closing Thursday. In overnight trading, the leu hit a low of 4.22 per euro, mirroring the currencies in the region.

According to dealers, the leu’s evolution was little moved by news of additional wage and pension cuts in the public sector President Traian Basescu announced Thursday evening.

In fact, the spending cuts may be benefic for the Romanian economy on the medium and long term, said Vlad Muscalu, economist at ING Bank Romania.

„The short-term outlook is gloomy, but once we have more details on the measures, we will probably upgrade our forecast on the 2010 economic growth from 0.9% currently,” Muscalu said.

At around GMT1000, the leu traded at 4.184/4.188 per euro, after hitting an intraday high at 4.18/4.182 per euro.

The leu was the only currency in the region to gain against the euro Friday and dealers suspect an intervention from the central bank to support the leu.

On the money market Friday, overnight rates rose sharply to 8.2%-8.7% a year, from 6%-6.5% a year the day before.