Aug. 22 (Bloomberg) -- The leu weakened from the strongest level in almost two months and yields rose as the reinstatement of President Traian Basescu added to concern Romania’s political turmoil may intensify.
The leu depreciated as much as 0.4 percent to 4.4952 per euro today, after strengthening 0.4 percent yesterday to the highest since July 4. It traded 0.3 percent lower to 4.4908 per euro at 5 p.m. in Bucharest. Yields on Romania’s dollar-denominated debt maturing in 2022 climbed six basis points, or 0.06 percentage point, to 5.73 percent, reversing a decline yesterday to the lowest since the bond was sold on January 31.
A presidential impeachment referendum on July 29 was invalid because participation of eligible voters was below the 50 percent threshold, the Bucharest-based Constitutional Court said yesterday. The power struggle between the president and Prime Minister Victor Ponta may continue until general elections are held in the fourth quarter as Ponta has said future collaboration with Basescu is “impossible”.
“The tension will prevail in the coming period and that ruling coalition will be looking for other solutions to change the current political setting, with negative consequences for the leu,” analysts including Mihaela Neagu at OTP Bank Nyrt. wrote in a note to clients today.
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