Who has reasons to rejoice over the weakness of the Euro against the leu?

• Analyst Florin Cîţu: "The fluctuations of the exchange rate over the last two months, do not reflect the strength of the economy, amid greater inflation".

Yesterday, the Euro reached a 13-month against the leu for the second time. The Romanian Central Bank (NBR) yesterday posted an exchange rate of 4.0735 lei/Euro, a level which hasn"t been reached since March 13th, 2010, when the Euro was quoted at 4.0729 lei.

The gains of the leu against the Euro, even though they may not have immediate effects, has some long term benefits and drawbacks.

On a macroeconomic level, the strengthening of the leu will help the Central Bank control inflation, which caught up speed in March and reached 8%, as a result of the increase in the price of fuel and food. Under these circumstances, governor Mugur Isărescu said that the NBR will revise its inflation forecast of 3.6% a year upwards.

Last week, the governor of the Central Bank said that the strengthening of the leu is hard to counter, as the interest rates are difficult to cut, and there is excess liquidity in Romania. Some analysts are worried about a speculative attack aimed at appreciating the Romanian currency.

Other analysts consider that the benefits of the strengthening of the leu will be felt predominantly by those who have loans in Euros and by foreign investors, whereas Romanian exporters will be hurt.

Economic analyst Călin Rechea said that borrowers with loans denominated in Euros could see a benefit, but this will depend on their salaries, because they may be put in a difficult position of repaying their loans.

In his opinion, the Central Bank may have started this strengthening of the leu, and others followed suit, but regardless of its cause, this strengthening is forced.

Călin Rechea said that foreign investors will also benefit foreign investors, who stand to gain by buying government notes and bonds which have high interest rates and offer high yields.

Analyst Florin Cîţu has a similar opinion. Moreover, he considers that the fluctuations of the exchange rate over the last two months do not reflect a strong economy, amid a high inflation. According to him, this shows that there is a lot of cheap money floating around the world, and Romania offers good short term yields, according to him.

On the other hand, Romanian exporters are harmed by this appreciation of the leu. Mihai Ionescu, the president of the National Association of Romanian Exporters and Importers (ANEIR), said that they have talked to representatives of the NBR, who expressed their concern on this matter and said that they would do their best to help. However, until then, Romanian exporters are being harmed by the strengthening of the national currency, he claims. In this respect, Bogdan Baltazar, financial consultant, said that a quotation of 3.9 lei/Euro would not be good for exporters.

Customers who took out loans denominated in Euros, between 2009 and 2010, when the Euribor reached a historic low, now have the possibility of refinancing their loans and to get far lower margins, says Liviu Andrei, a director with Alliance Finance Broker. He said: "The strengthening of the leu can only be good news for borrowers who took out loans in Euros. However, the rising trend for the Euribor could dampen this enthusiasm a bit. In order to keep the interest rates at the levels they had in the beginning of the year, most banks have begun lowering their fixed margins, thus countering the rise of the Euribor". Ruxandra Andrei, deputy general manager at Finzoom shares a similar opinion. On the other hand, those who are compensated in Euros or whose income is tied to the exchange rate are at a disadvantage, as their monthly expenses still have to be paid in lei, she says.

"Even though it is not a disadvantage per se, the depreciation of the Euro will still mean that sellers of properties will receive fewer lei", Ruxandra Andrei said.

The national currency has also gained against the US dollar. The NBR has displayed an exchange rate of 2.7862 lei/dolar, down 1.64 bani compared to the previous quotation.