The exchange rate is nearing 4.1 lei/Euro

The exchange rate dropped yesterday to a new annual low of 4.1008 lei/euro, in particular due to the improved perception foreigners now have on Romania, after the normalization of the country"s political situation and the positive signals of the NBR by lowering the policy rate to 7.5%", said Nicolaie Alexandru Chidesciuc, chief-economist with ING Bank. Analysts of ING Bank said they were expecting the leu to strengthen at the end of last week, according to a report they had received. "The economic fundamentals do not justify an appreciation of the leu, but the positive sentiment may persist. We could see the EURRON pair trade below 4.1 this week, as it goes to 4.0", the report says.

Bank dealers says that yesterday, the exchange rate was stable compared to Friday, the market was extremely quiet, just like in the rest of the region. At the same time, the other currencies in the region gained slightly, some of them due to domestic reasons. For instance, the Polish zloty appreciated slightly after statements about a hike of the policy rate.

Dealers say that there will be further gains.

The current exchange rate for the leu favors consumption, according to dealers, who say that an appreciation of the leu would harm exporters. They said that the average exchange rate could go below 4.1 lei/euro. In order to keep the leu at that level, an intervention of the NBR is needed, dealers say. They said that overnight interest rates remain low, causing the leu to appreciate, but even if they were to increase, the leu could gain on the back of rising risk appetite among investors.