The central bank Wednesday left its main rate unchanged at a record low of 5.25% a year. The bank also left the minimum reserve requirements unchanged at 15% for Romanian-leu denominated liabilities and at 20% for foreign currency liabilities.
“In our view, the main reasons behind today’s decision are the political turmoil and a possible increase in the inflation rate in the second half of 2012,” Erste analysts said.
Romanian lawmakers Friday voted in favor of a no-confidence motion against the center-right government led by Mihai Ungureanu. The government’s collapse raised concern over the country’s ability to move forward with austerity measures and triggered an immediate depreciation of the national currency.
“Although the appointment of a new government supported by the Social Democrat Party, the Liberal Party and the Conservative Party is a done deal, the political environment remains shaky,” Erste said.
The Austrian bank estimates the leu’s exchange rate will stabilize around 4.35/4.4 per euro in the short term.
However, “local political instability amid the jittery European context may pose risks to this scenario,” it said.