The National Bank of Romania (NBR) pursues (at least for the time being) a 2%-4% real ROL appreciation against the foreign currency basket this year. This interval is the same that was targeted last year.

"It has to be clear that the central bank does not set a rigid target for the real ROL appreciation, but always relates to an interval instead. We relate to a margin, to a currency basket, in which the two benchmark currencies for the Romanian economy, the euro and the US dollar, account for different shares. Nobody can tell now where will ROL's exchange rate against the euro or the dollar go. And this is because in the end it all depends on the trends of the EUR/USD rates on the foreign markets," NBR Governor Mugur Isarescu yesterday said.

Isarescu explained that setting an interval did not mean "rigidly targeting" these parameters. He warned it was necessary to distinguish between the real appreciation of the ROL (i.e. the depreciation of the ROL against the main currencies at a pace slower than the inflation) and the "volatility field" which highlights the amplitude of the foreign exchange trends in certain periods of the year.

Starting from a 9% inflationary target for this year, a target the central bank believes can be attained at the moment, a real 2%-4% appreciation of the ROL against the foreign currency basket would translate into a 5%-7% real depreciation of the ROL against the basket.

Considering it is very hard to estimate where the EUR/USD exchange rate will be at the end of the year, any forecast about the ROL growth against either of the two is implicitly hard to make. For instance, assuming the depreciation against the basket was about 7% and the euro was worth $1.3 at the end of the year, the ROL/EUR exchange rate would be 44,300 ROL and the ROL/USD exchange rate would reach 34,076 ROL. Th