EnglishING Bank Romania expects that the RON will depreciate to 3.45 RON/EUR in the next year as a result of the National Bank"s attempt to hamper the national currency"s appreciation in the context of a notable plunge of the current account deficit and a significant decrease in the deficit coverage with foreign direct investments.
"We believe the National Bank is determined not to let the market over-evaluate the RON and will gradually push the RON/EUR rate up," an ING Bank Romania study indicates.
"The fiscal policy relaxation and the irrational salary and pension policy are likely to further deepen the foreign imbalance. As a result, we expect the current account deficit to reach 13.8% of the GDP at the end of the year. The deficit coverage in foreign direct investments will decrease to 50%. Under these circumstances, we expect the RON to depreciate to 3.45 RON/EUR in the next 12 months," the study further indicates.
The RON gained 4% on the EUR in June, rising to a five-year high on July 2nd. The rate then moved to 3.115 RON/EUR following substantial buy orders from a major private bank, which led ING Bank analysts to think that the National Bank was behind the operation.
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