“The leu doesn’t seem affected by the recent events, despite wide media coverage in international markets, as the investors have probably become less sensitive to such events over the past few years. The leu has the reputation of a strangely stable currency,” said Vlad Muscalu, analyst at ING Bank Romania.
Should the protests continue, the center-right government might be forced to resign, endangering the country’s financial agreements with its international partners and putting pressure on the leu, Muscalu added.
Thousands of Romanians took to the streets over the past four days to protest against austerity measures, demanding the resignation of President Traian Basescu and of the government members.
Initially in support of a health ministry official who resigned after a row with Basescu over a controversial healthcare bill, the protests turned into anti-government rallies and led to clashes between participants and law enforcement officers.
“The events had no effect on the leu’s exchange rate, as they were offset by foreign currency sales from local banks and the positive evolution of neighboring currencies,” said Ciprian Mihai, head of Volksbank Romania’s forex and derivatives division.
Local stocks markets were similarly unhurt by the recent protests, but their escalation could shake investors’ confidence in the economy, said Adrian Ceuca, a director with SSIF Broker.
“Romania has been the IMF’s good student, as it took some harsh measures to obtain and maintain a better economic and financial situation than many states in central and western Europe. The stocks are unaffected for now, but should the conflicts escalade, then both the Bucharest Stock Exchange and the leu will certainly decline,” Ceuca told Mediafax.
Romania’s leu ended 0.3% stronger against the euro Monday, fueled by increased euro sales from commercial lenders, while the Bucharest shares were relatively unchanged on the day.