Leu Strengthens First Day in 4 as Romanian President Reinstated
Romania’s currency gained for the first time in four days, reversing an earlier decline, after a Constitutional Court ruling allowed President Traian Basescu to return to office.
The leu appreciated as much as 0.5 percent and traded 0.3 percent stronger at 4.4816 per euro by 7:09 p.m. in Bucharest, the highest since Aug. 15. It lost as much as 0.2 percent in earlier trading before the court’s decision today, according to data compiled by Bloomberg. Yields on Romania’s dollar- denominated bond maturing in 2022 fell 3 basis points, or 0.03 percentage point, to 5.68 percent, the lowest since the bonds were sold Jan. 31.
Judges voted six to three to invalidate a July 29 presidential impeachment vote as less than 50 percent of the eligible voters participated in the referendum, the Bucharest- based court said today. The power struggle between Basescu and Prime Minister Victor Ponta has weakened the leu and increased the country’s borrowing costs.
“Return to office raises concerns of a continuation of disagreements between him and the government,” analysts including Irina Cretu at the National Bank of Greece (TELL) Securities Romania SA said in an e-mail after the ruling.
The leu has declined 0.3 percent in the past three days, extending its three-month retreat to 1.2 percent, the worst performer among emerging-market currencies tracked by Bloomberg.
Romania’s Finance Ministry rejected all bids at an auction yesterday because of “unacceptable yield offers,” the central bank, which organizes the auction, said. The administration had planned to sell 500 million lei ($137 million) in one-year treasury bills. Demand totaled 864 million lei for the bills, the bank said on its website.
Yields on one-year treasuries rose to 5.66 percent on Aug. 6 from 5.29 percent on June 11, according to central bank data.
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