The Romanian leu depreciated on concern Italy’s inconclusive parliamentary elections will worsen Europe’s sovereign-debt crisis, reducing investors’ risk appetite.
The currency fell, in line with most emerging-market peers, as early results suggested Italy’s election would lead to a hung parliament and another vote. Stocks in Europe fell and the euro weakened against the dollar.
The leu weakened “given the sour sentiment that took over the markets after the exit polls of the Italian elections,” Catalina Molnar, a Bucharest-based economist at UniCredit Tiriac Bank SA wrote in a note today.
The currency lost as much as 0.3 percent, its weakest level on a closing basis since Feb. 12, before paring its loss to 0.2 percent 4.3832 per euro by 4:45 p.m. in Bucharest. The euro fell 0.7 percent versus the dollar to 1.3101, retreating for a fifth day.
Democratic Party Leader Pier Luigi Bersani, the ex-communist who campaigned to maintain budget rigor, won control of the lower house and not the Senate, while rival Silvio Berlusconi called for a recount of votes casted in Italy.
Today’s decline reduces leu’s advance this year to 1.6 percent, the second-best performance among emerging Europe, Middle East and Africa currencies tracked by Bloomberg.
Romania’s debt has rallied as select fixed-income securities are eligible for entry to JPMorgan Chase & Co. and Barclays Plc’s emerging-market bond indexes from March.
“Some more foreign inflows ahead of the inclusion of local debt in influential emerging market index on Friday may limit leu depreciation, but we still see the local currency losing ground to 4.4 per euro in the near run,” Mihai Tantaru, an economist at ING Bank Romania SA wrote in a note today.