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Romanian Leu Falls To All-Time Low Vs Euro, At 4.3257

Romania's leu extended early losses against the euro in mid-trade Monday after a government decision to hike the value added tax raised concerns about inflationary pressures, while the central bank’s reference hit an all-time low at 4.3257 to the European currency.
Romanian Leu Falls To All-Time Low Vs Euro, At 4.3257
28 iun. 2010, 13:32, English

The leu’s indicative lost over 1% to the euro since Friday, when it was set at 4.2808 units.

Against the US dollar, the leu’s reference rate weakened 0.2% to 3.4996 units.

The authorities in Bucharest Saturday decided to increase the VAT level to 24% from 19% to offset the annulment of a 15% reduction in pensions and ensure the continuity of its EUR13 billion loan agreement with the International Monetary Fund.

„Everything is up in the air right now, because no one knows when the money will come after the IMF postponed indefinitely its board meeting regarding Romania’s agreement,” Georgiana Constantinescu, analyst at Credit Europe bank told MEDIAFAX.

On the interbank market, the leu traded as low at 4.33/4.333 to the euro Monday, the weakest level since January last year. According to dealers, the investors are worried after a central bank official said the leu could „go off road” and trade at 5 to 6 units to the euro.

The political uncertainty took its toll on the money market as well and the overnight rates rose to 5.8%-6.3% a year Monday, from 5.2%-5.7% a year Friday.