Romania’s Leu Retreats as Ponta Names Cabinet to Tackle Economy
Romania’s leu retreated after Prime Minister-Designate Victor Ponta named his Cabinet, shifting investor focus from last week’s elections to the need to tackle the current account gap and secure an international bailout.
The currency depreciated 0.1 percent to 4.4730 per euro by 5 p.m. in Bucharest. The currency added 1.4 percent last week, making it the best performer among emerging-market peers tracked by Bloomberg. Yields on Romania’s 2019 euro-denominated bonds declined nine basis points, or 0.09 percentage point to 3.95 percent today.
“The leu’s current decline may be justified by a tendency to look at the country’s fundamentals, especially at the current-account deficit, which is less financed by foreign investments and there are fewer capital inflows,” Vlad Muscalu, a Bucharest-based economist at ING Bank Romania SA, said in a phone interview today.
Ponta’s 26-member Cabinet, which includes a new finance minister and a division of the Economy Ministry, will hold talks with the International Monetary Fund and the European Union in January, during a review mission of a current 5 billion euros ($6.6 billion) precautionary accord, on a new deal, once the current one expires at the end of March.
Romania’s current-account gap stood at about 4 billion euros in the first 10 months of this year, according to the central bank’s data. Foreign direct investments totaled 1.3 billion euros, covering 29 percent of the deficit.
Yesterday, the government extended until the end of 2013 a deadline to sell minority stakes in some state-owned companies after pledging to international lenders it will try to sell the stakes by the end of this year. The deadlines were extended several times over the past two years because of market conditions.
“The delay of state assets may have also had an influence on the leu today,” Muscalu said.
Ponta said today in a Bucharest news conference that he plans to move Economy Minister Daniel Chitoiu, 45, to the Finance Ministry, replacing Florin Georgescu, who will resume his post as central bank deputy governor.
To contact the editor responsible for this story: James M. Gomez at firstname.lastname@example.org