Euro at 5.20 lei, the new normal? Here’s what Isarescu says

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The head of the NBR avoided saying whether Romanians should get used to the current exchange rate or not, but emphasized that, according to the central bank’s calculations, the euro seems to be in a balance zone.

NBR Governor Says Current Exchange Rate Seems to Be Market-Based, but Warns Stability Depends on Fiscal Correction

The Governor of the National Bank of Romania, Mugur Isărescu, said the market will decide the evolution of the euro/leu exchange rate, after the European currency has been hovering around 5.20 lei for about two weeks.

Asked when the euro might fall or whether it will remain stable in its current range, Isărescu replied: “The market will say. That’s the short answer.”

Isărescu on inflation: “It will increase by July. It will probably go up to 11%”

Euro la 5,20 lei, noua normalitate? Iată ce spune Isărescu

The NBR Governor explained that the central bank is currently allowing greater exchange rate flexibility, and the evolution will depend on supply and demand.

“Since I said we’re going to leave it more flexible, the market will respond whether it’s up or down. According to our calculations, it seems to be where it needs to be,” Isărescu said.

He specified, however, that these assessments are just calculations, while the market is made up of „hundreds, thousands of operators, buyers, sellers”.

Current exchange rate

Asked if Romanians should get used to the current exchange rate, Isărescu rejected the formulation.

„I’m not telling you that you should get used to the current exchange rate. I’m telling you that it’s a market rate, for now, and it might be normal”, said the NBR governor.

The NBR governor explained that Romanians look at the euro/leu exchange rate as an indicator of confidence in the economy, and sudden movements can provoke negative reactions.

„This particularity of Romania, of the population, that they look at the exchange rate as an indicator of confidence. Too violent movements are not good”, said the NBR head.