Interest rates for euro loans up 25 percent due to leu depreciation

Publish date: 07-10-2008
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The interest rates of Romanians who took banking loans in euro increased by an average 25 percent due to national currency depreciation, who was short on the RON4/€1 threshold yesterday, close to a four-year high.

Furthermore, the Euribor interest reached a 14-year high, up to 5.345 percent, amid international financial crisis. Euribor is used to calculate variable interest rates .

Of the total funds borrowed by individuals and companies, more than half are euro loans, amounting to €28.4 billion.
"There will be problems for those who took relaxed loans last year. A client who borrowed money last year in August pays an extra 20 percent due to RON depreciation alone, to which interest rate increases are added," Raiffeisen Bank's head of Macroeconomic Research, Ionut Dumitru, told Business Standard.

The current international environment also led to a 5.38 percent decline in stock market indexes, due to the belief that country risk is increasing. "Obviously, massive depreciation of Romanian shares has several reasons - elections year, inflation pressures, macroeconomic conditions, economic perspectives, emerging country, cumulated with events on foreign financial markets.

Business Standard

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