ING: EUR/RON rate could drop to 4lei/euro in April

ING analysts said the leu could strengthen further against its European peer, and anticipate a 4lei/euro rate in April. However, the trend will reverse in a few months, as the economy remains weak.

“The national currency should remain strong on the short term, growing to 4.00 units/euro next month. However, NBR could step up efforts to head off a sharper appreciation of the leu, as the central bank governor, Mugur Isarescu had already expressed fears of a too rapid rise of the leu in an interview to Financial Times,” ING said in a report.

However, analysts anticipate the trend would reverse within 3-6 months, due to a number of factors, such as too low interests and an increase in global markets interests, “should the liquidity narrow gradually”.

“Furthermore, the economy remains fundamentally weak, and the appreciation of the national currency will make the situation even worse”, ING said.

EUR/RON could go back to 4.15 at the end of June and to 4.20 at the end of September, and to drop to 4.10 lei at the end of the year, ING said. “We predict a peak of 4.25 lei/euro, while exchange rates below 4.00 lei/euro will be short lived”.

EUR/RON rate fell sharply in the past weeks to 14-month low of 4.06 lei/euro.

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