CFA Romania: BNR should let RON depreciate

BNR ought to let the RON depreciate in order to help exporters and therefore have the economy externalise recession, is the opinion of Adrian Mitroi, Secretary General of the Chartered Financial Analyst (CFA) Association Romania. "I hope BNR people will be wise enough to let the RON depreciate, or else we will lose our competitive edge. I mean a competitive depreciation acting as a support for exporters. I wouldn't want to see an appreciated RON because real economy should not have to pay," Mitroi was quoted by Mediafax as saying during an economic conference. He added that the 'manager' of the exchange rate would continue to be the central bank, which would have to keep liquidity and solvability in balance.

"A slightly depreciated currency works as a recession exporter. It means that you import economic growth and share some of your own recession with others," Mitroi said. The CFA Romania official mentioned that he would have preferred a VAT hike 'at any time', but admitted that it had also been attempted in Hungary where it didn't yield expected results. "If we look at the Hungarians who took these measures before us, we will see a still large deficit and a depreciated local currency," Mitroi said. The key-exchange rate posted by BNR on Wednesday hit a seven months high of RON 4.2311/EUR, up by 1.31 bani since Monday when it was at RON 4.2180 to the EUR.

A higher rate was calculated by BNR for the EUR on December 16, 2009 - RON 4.2459/EUR. However, the exchange rate only recorded insignificant oscillations during the first part of the trading session and the National Bank of Romania calculated a key-rate of RON 4.2200/EUR, lower by 1.11 bani than the one on Tuesday. The exchange rate against the US currency yesterday was RON 3.5274/EUR, lower by 2.22 bani than the all-time record low of RON 3.5496/USD registered on Monday.

AAFBR: Annual inflation up to 4.4 pc

Consumer prices grew by 0.1 per cent in May, causing the annual inflation rate to climb from 4.28 per cent in April to 4.4 per cent, the members of the Association of Romanian Financial-Banking Analysts (AAFBR) estimates.

According to the Association's internal poll, the estimates vary from 0.1 per cent to 0.3 per cent in what concerns the monthly inflation rate and from 4.4 per cent to 4.6 per cent in what concerns the annual inflation rate, Mediafax informs. At the same time, 70 per cent of the respondents estimate that the inflation rate stood at 0.1 per cent in May. Consumer prices stagnated in May 2009, with the inflation rate standing at only 0.01 per cent.

50 per cent of the respondents consider that the inflation rate will stand at 4 per cent at the end of 2010, with the estimates varying from 3.7 per cent to 4.7 per cent. In May BNR revised its prognosis on this year's inflation rate from 3.5 per cent to 3.7 per cent.

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