Romania Eyes Keeping Leu At RON4-RON5 Vs Euro – President

Basescu said that one of the major anti-crisis goals is to keep an acceptable exchange rate in order to facilitate exports, but also to preserve Romanians’ purchasing power.

The president added that another target would be the maintaining of the budget deficit, in order to keep the current 8-9 million euro investments, and to be able to pay salaries, pensions and social aids in due time.

On Thursday, Romania’s ruling Social Democratic and Democratic Liberal parties broke an already frail coalition, after the social democrats resigned to protest the sacking of one of their ministers in the Cabinet.

The coalition collapse immediately triggered effects on the local financial markets, with the leu falling by more than 1%, and the bourse losing 2%.

Economic analysts said Thursday that the ruling coalition collapse would put pressure on the Romanian leu, while a minority government will endanger the targets established in the agreement with International Monetary Fund, restricting even more the central bank’s capacity to protect the currency.

Romania secured end-March a EUR19.95 billion financial aid from the IMF, the European Union and other international institutions to cope with the deepening recession. IMF granted Romania a EUR12.95 billion two-year stand-by loan, as part of the financial package, conditioned by fiscal and institutional reforms.