Isarescu: Sharper devaluation of the leu wouldn’t be a solution

Redactia Wall Street, 8 Oct 2009

Romanian version

The governor of the National Bank of Romania, Mugur Isarescu made a series of statements at the Parliament hearing, a month after his latest media briefing on macroeconomic issues.

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“Devaluation of the local currency is not a solution”

The sharper devaluation of the local currency is not a solution to the country’s wide budget gap, nor to the crisis affecting the entire economy, said yesterday the governor of the central bank, Mugur Isarescu.

“We still have verbal interventions, as we are very familiar to the currency markets, we read reports, and we want to calm traders. Sharper devaluation of the leu isn’t a solution to budget deficit, but would actually increase our problems”.

He added that a further decline of the leu against the single European currency to an exchange rate of 5-6lei/euro, as some analysts predict, would entail a sharp reduction of the budget deficit, “It would mean a surplus, which is impossible for an emerging country in need of foreign investments”.

Additionally, the “2-4% deviation of leu-dollar exchange rate was not significant from an economic perspective”, said Isarescu.

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