Raiffeisen Bank’s senior economist Ionut Dumitru said recently that political tumult “could put the stand-by arrangement with International Monetary Fund and European Commission at risk, which would have a negative impact over the approach to risk in Romania, and subsequently over exchange rates and real economy”, and would damage the country’s recovery prospects.

He outlined two scenarios: In the first case, interim ministers will be appointed instead of those nominated by the Social-Democratic Party which would function for only 45 days before a new government comes to power after being passed by the Parliament, or in the second case, a new government could be formed now and approved by the legislative body.

“It is unlikely for a new coalition to be formed, as this would mean long-range political instability. Let us remember that presidential elections are scheduled for November 22, 2009”, the economist stressed.

As a response to the political events, the local currency fell today against the single European currency by 1.2%.

The National Bank of Romania posted on Thursday an official currency exchange rate of 4.2495lei/euro, up by 1.22% compared to yesterday’s rates, after a political crisis erupted due to the removal of deputy PM from office and PSD’s exit from the ruling coalition.