What currency to save in?

Saving in Romania

Before the banking industry in Romania rolled out its saving offers in foreign currency, Romanians could only keep their savings in lei, the same currency in which their income was paid. Before the diversification of the local banking system, natural persons and companies would keep their cash savings ‘in a pile under the mattress’ or at CEC (today CEC Bank). Afterwards, the US dollar, euro and “exotic currencies” (Swiss franc and Japanese Yen) crept in banks’ products and services.

Today, savings in bank deposits tend to broaden, especially in terms of currencies. Romanians usually choose to keep their money in euro or US dollars due to the sharp devaluation of the leu against the two currencies over the past years.



The migration from domestic to foreign currency was observed also by the senior economist of the National Bank of Romania, Valentin Lazea. This change will minimize bank’s capacity in giving loans in domestic currency, he said.

Performance of the currencies

Although in the past, the leu was considered to be one of the strongest currencies in the emerging world, over the last 12 months it has significantly lost ground versus euro and other foreign currencies.

Against Europe’s single currency, the leu fell sharply over the past two years, EUR/RON going up 16% from October 27, 2008, and 28% from October 26, 2007. Therefore, the winners of the currency’s devaluation were those who denominated their savings in euro.

Source: NBR

USD suffered marked fluctuations over the past two years. At that time, the dollar traded for 2.3329 and a year later the exchange rate reached 2.9607.

With a steady performance and narrow volatility are the Swiss francs, and GB pound. Today, a pound is sold for as much as 4.7316 lei, 4% more than a year ago, but 1.2% cheaper than two years ago. Swiss franc has been appreciating steadily against the local currency, by 10% over the past 12 months and by a whopping 41% over the past 24 months. Today, a Swiss franc is worth 2.8306 lei.

Tips from market analysts

For the time being, a saving basket with deposits both in euro and lei seems to be the best way to go, according to Radu Craciun (photo), investment director at Eureko.

“A mixture of savings in lei and euro is the best option at the moment, and the share of each currency depends on the savers’ tolerance to risk. A saver who is not willing to take any currency devaluation risk and wants to play safe, he will go with the euro. If he wants higher returns, he will go with the leu, as deposits in local currency returns higher yields”, Radu Craciun told Wall-Street.

Dragos Cabat (photo left), managing partner at Financial View says savers must decide for how long they will be saving firstly and then choose the currency.

“For a month, deposits in lei are a good option but for a 3 to 6-month time horizon, it would be better for savers to choose euro. For one to three years, the local currency remains top of the list, but for any time horizon longer than 3 years, foreign currency is the best option. Only that in Romania, term deposits with more than 5-year maturity don’t exist”, Dragos Cabat added.