Romanian Leu Falls 2nd Day on Basescu’s Impeachment Referendum

Romania’s leu weakened for a second day before a Constitutional Court ruling on the presidential impeachment next week which may worsen the country’s political gridlock.

The currency depreciated 0.1 percent to 4.4862 per euro at 5:15 p.m. in Bucharest, extending its loss this year to 3.7 percent, the second-worst among emerging-market currencies tracked by Bloomberg after the Brazilian real. The leu is heading for a 1.1 percent gain this week.

Romania’s Constitutional Court will meet on Aug. 21 to debate whether a July 29 vote to impeach suspended President Traian Basescu is valid. The power struggle between Basescu and Prime Minister Victor Ponta in the past two months has pushed the currency to record lows and boosted borrowing costs.

“The referendum ruling is a key Romania specific factor for the leu and adds a lot of uncertainty about where it could go next week,” Koon Chow, an emerging-market strategist at Barclays Capital, said in an e-mail note today.

The central bank lent 5 billion lei ($1.4 billion) in one- week repurchase agreements auction on Aug. 13, compared with 12.1 billion lei on July 30, according to the Bucharest-based bank. Romania’s interbank offered rate, or ROBOR, rose to 6.22 percent yesterday, the highest in eight months.

Before a ruling, the court must check the number of eligible voters in the country to decide whether a minimum turnout threshold of half of the electorate was achieved. If the referendum is invalidated on the turnout, Basescu will return to his office.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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