Romanian Leu Falls 2nd Day on Europe Debt Crisis, Interest RatesAndra Timu and Irina Savu
The leu weakened for a second day on concern Europe’s debt crisis may worsen and as the Romanian central bank kept the highest interest rate in the European Union unchanged today.
The leu trimmed its first-quarter gain as investors speculated Slovenia may follow Cyprus as the next euro-region member requiring a bailout. The Banca Nationala a Romaniei left its policy rate at 5.25 percent today, matching the estimates of 20 economists in a Bloomberg survey.
“The local currency softening overshot our expectations,” Mihai Tantaru, a Bucharest-based economist at ING Bank Romania, wrote in a note today. “As core markets uncertainty looks bound to last for yet another day, we see the leu trending between 4.41 per euro and 4.42 per euro today.”
The currency depreciated as much as 0.2 percent to 4.4221 per euro before trading little changed at 4.4133 per euro by 5:30 p.m. in Bucharest, paring its gain in the first three months to 0.7 percent.
Slovenia’s pledge to continue austerity measures failed to stem a rise in bond yields to record highs as investors worry the Alpine nation will follow Cyprus as the next euro-region member requiring a bailout.
Cyprus’s commercial banks reopened today, with new rules curbing access to cash after being closed since March 16.