The steep decline of leu, down to almost 4/euro hits importers, that need to pay higher amounts in lei for the same commodities acquired from euro zone. Wall-Street presents an analysis on companies’ reaction to currency exchange sways, together with financial advisors and managers in the field.
The national currency stabilized near to3.95lei/euro after plunging down to four-year lows during the day, as prime minister and NBR governor’s messages failed to lift the quotations of the leu.
National currency might drop down to 4lei/euro or even lower as long as National Bank of Romania is not intervening in the currency market, Nicolae-Alexandru Chidesciuc, ING Bank’s senior economist stated.
Dragos Cabat, managing partner with Financial View said a steep depreciation of the currency always takes by surprise importers, unless they have already positions shielded by currency hedging operations. “Sharp currency exchange variations are dangerous for economy both for importers and exporters in the shock they trigger on short-term sale and clients,” said Cabat, who previously worked for financial groups namely UniCredit, OTP or Citi.
Financial advisor says companies that reel from this climate are likely to sharply modify price margins, in an effort to cover currency exchange fluctuations. “This thing may visibly cut companies’ sales volume.
Furthermore, it is forecasted a slowdown or delay in investment projects; on a short-run, the off-balance of trade climate, and on medium term, to offset the trade’s balance beam, whereas major economic growth and high inflation are at stake,” Cabat pointed out.
Leu’s meltdown was steeper than in case of other emerging currencies in the region.
The sharp decline of leu can entail inflation boost and new measures to raise NBR’s benchmark rate, namely higher installments and less accessible loans a
