According to ING, the leu might slightly strengthen Friday, following the decision of U.S. Federal Reserve to leave interest rates unchanged.
Romania’s leu slightly depreciated versus the euro Thursday, and closed at 4.424 per euro, after prosecutors indicted PM Ponta. Initially, the EUR/RON pair moved as high as 4.4285, ING said.
“We continue to expect relative stability (or, at most, limited political noise) as the recent wide political consensus on the Fiscal Code and the prospect of negotiations with the IMF for a new agreement limit major risks going forward. Thus, we see a somewhat low impact on domestic markets from political developments. There is some appreciation potential today after the Federal Reserve kept rates unchanged, with markets reading the overall message as dovish and the Fed funds implying probability of a hike this year at below 50%. However, we see RON strength limited by the fact that the EUR/RON pair is trading close to the lower boundary of the NBR’s stability zone (4.3800 4.5200). ING still believes October is in play for a Fed hike,” according to an ING note for investors and analysts.
At 11:00 local time Friday, the leu traded at 4.421 per euro.
On Thursday, Romanian Prime Minister Victor Ponta was indicted on charges of accessory to tax evasion and money laundering and 17 counts of forgery, the country’s anticorruption department DNA said in a statement.
U.S. Federal Reserve announced Thursday it would keep its benchmark interest rate unchanged at near-zero amid a weak global economy, low inflation and instability in financial markets.
The Bucharest stock market opened higher Friday, amid traded values worth RON3.8 million at 11:15 local time, unimpacted by Fed decision either.