Saxo: Romanian Exchange Rate May Rise To 4.84 RON/Euro If IMF Terms Not Met
Publish date: 15-01-2010Officials of Danish lender Saxo Bank said on Wednesday that the exchange rate may reach 4.84 RON per euro in twelve months time if the authorities fail to implement the structural reforms required by the International Monetary Fund under a EUR13 billion loan agreement.
Christian Blaabjerg, Chief Equity Strategist at Saxo, states that such a scenario, which premises Romania's failure to meet IMF demands and zero interventions on the market from the central bank, has a probability of over 50%. The official estimated the leu could advance to 3.96 units per euro in the first month; three months later, the leu would fall to 4.1 units per euro and would continue to depreciate to as much as 4.84 units per euro at the end of the 12 months period, if the scenario does occur.
Should the government meet the IMF's requirements, the leu is bound to see a smaller depreciation, Blaabjerg said. However, the probability for this to happen is below 50%, he added.
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