ING Bank revises euro/leu forecast

The European currency will rise to 4.6 lei by year-end, and fall to 4.4 lei by August 2010, ING Bank Romania wrote in the latest report on major currency themes.
For the coming month, ING analysts see an exchange rate of 4.25 lei/euro and expect it to climb to 4.3 lei/euro over the following three months.

“Besides further sharp deterioration in fundamentals due to a worsening recession and IMF expecting a budget deficit of 7.3% of GDP, we see a weaker than previous medium-term RON outlook after the decision to use money from the IMF to finance the budget gap”, ING Bank Romania said.

The National Bank of Romania may consider further monetary policy cuts after it reduced the key rate by another 50bp to 8.5% on 4 August.

“The local currency continues to trade in a very tight range against a backdrop of thin liquidity. The NBR is probably behind the current EUR/RON stability and could intervene in the FX market if required given that the NBR governor reaffirmed a commitment to keep low FX volatility”, the bank said.

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