National bank governor believes leu capable of recovery

Governor of the National Bank of Romania (BNR) Mugur Isarescu reiterated confidence in the national leu currency on Tuesday, despite its relatively noticeable depreciation to the euro and the US dollar.

'I think the leu is capable of picking up and it will come back to normal, from a certain moment', Isarescu told a ceremony launching the National Sustainable Development Strategy.

He argued the national currency wouldn't have posted such a negative evolution in the past two or three months 'if we hadn't have our own weaknesses, namely such an unhappy habit of concentrating very many expenditures in November and December, not only as the national budget is concerned, but also in the private sector'.

However, the central bank governor declined to make any forecast regarding the time needed by the leu to recover or the level it would attain compared to the euro and the dollar. 'The National Bank has never made and it will never make such forecasts', he stressed.

Furthermore, Isarescu believes it is an 'exaggeration' to speak of an economic crisis. 'Such exaggeration, accompanied by scores of negative, over-pessimistic commentaries - after the same analysts had been over-optimistic less than six months ago - do the leu or the national economy no good', he stressed.

The governor argued that 'betting on the leu is a bet on a currency that incurs no risks', but he added the National Bank has always underscored the foreign exchange risk and when it spoke of 'betting on the leu' it didn't do it by taking into account 'an incessant, unhampered appreciation' of the national currency.

'We should say very clearly that the one who bets on such things bets on a lottery and the recent events have proved it. We do not push the Romanians towards the lottery, unless they want it. Anyway, the exchange rate lottery is much more expensive and offers much smaller chances of success than the national lottery', he said.

Isarescu insisted that some comments like 'the BNR and the Finances Ministry stepped into the market to stop the leu's depreciation' are 'technically incorrect' as far as the National Bank governor is concerned.

'When the Finances Ministry takes money from the market it means it borrows - i.e. it doesn't sterilise, it doesn't step in. It takes money in order to put it again into the market, since it has expenditures to make. It is only the BNR, by its sterilisation effort, that seeks to provide the money- and foreign exchange market the normal functioning conditions', Isarescu explained.

Rompres