Radio România Internațional

Tag: the leu

  • The National Bank of Romania and the monetary policy

    The National Bank of Romania and the monetary policy

    2019 started
    with major turbulence on the Romanian currency market. The national currency,
    the LEU, has reached new historic lows as against the Euro from one day to the
    next. Rated at 4.66 lei in the first days of 2019, the Euro exceeded 4.7 lei in
    mid January. The national currency also depreciated against the dollar and the
    Swiss franc.






    Also in January,
    ROBOR, the Romanian Interbank Offer Rate, the main index according to which
    variable interest rates for credits in lei are calculated, has neared 3%, thus
    putting further pressure on the Romanians who are paying interest rate on
    loans. Turbulence also propagated to the political scene.






    The Social
    Democratic Party pressured the national bank to intervene on the market to save
    the LEU, making available the very government reserves worth almost 37 billion
    Euros. The Alliance of Liberals and Democrats, the partners of the Social
    Democrats in the governing coalition, also criticized the governor of the
    national bank, Mugur Isarescu, whom they accuse of tolerating alleged
    burdensome practices promoted by the commercial banks in establishing the ROBOR
    index.






    In another
    development, according to data published by the central bank, the money supply
    rose by almost 9% in December 2018 as compared to the same month of the
    previous year, which led to the depreciation of the LEU. A national bank
    advisor on strategy issues Adrian Vasilescu said that the developments on the
    currency market had more of a psychological effect and that the intervention of
    the central bank could be deemed appropriate only if the depreciation rate
    exceeded 4% up to 5%.






    On Thursday the
    central bank announced that, under its monetary policy, it would maintain the
    interest rate at 2.5% per year and would keep the current levels of the minimum
    reserve requirement rates applicable to banks’ liabilities in the national and
    in hard currency. After the meeting of the national bank’s Board of Directors,
    governor Mugur Isarescu stated that they forecast a continuation of the
    inflation rate’s downward trend followed by an upward trend of up to almost
    3.5%.






    Mugur Isarescu: The new forecast scenario reconfirms the prospect of a continued drop
    in the annual rate of inflation for the coming 3 quarters of the year down to
    values that are slightly lower than those initially estimated. Then there will
    be an upward trend of the inflation rate that will be maintained at a value a
    little under the superior ceiling of the target interval until the end of the
    period of prognosis. The uncertainties and risks associated with the inflation
    rate fluctuations are related to the new set of fiscal and budgetary measures
    that came into force on January 1 as well as to the government’s failure to finalize
    the 2019 draft budget, and implicitly to the future fiscal and income policy.






    Governor Mugur
    Isarescu also added that both the monetary and currency market were functioning
    very well and gave assurances that there was no indication of anti-competitive
    agreements between banks for the establishment of the ROBOR index.



  • From a weak leu to bank interest rates

    From a weak leu to bank interest rates

    The Romanian currency, the leu, finished the week at a new record low against the euro. The leu has depreciated constantly in recent days. On Friday, the exchange rate set by the National Bank of Romania was 4.6975 against the euro. Under the circumstances, the president of the parliaments economic committee Daniel Zamfir asked the National Bank to change the regulation and method of establishing the ROBOR index, which is used for the calculation of consumption credits in lei.



    He also invited the National Bank governor Mugur Isarescu and the president of the Competition Council Bogdan Chiritoiu to provide explanations on the subject. Zamfir, who is a senator of the Alliance of Liberals and Democrats, the junior member of the ruling coalition, says he has information originating from a hushed-up investigation of the Competition Council according to which this index is faked with the direct involvement of the National Bank and does not represent the result of a free market.



    Daniel Zamfir: “The banks act in concert to raise the ROBOR level and thus make up for their own hard currency speculations. How? Its very easy, they raise the ROBOR level, thus leading to a rise in the rate paid by people who have credits and thats how they cover the holes they made elsewhere.



    The senator says these allegations are based on information coming from the banking market and a report of the Competition Council that began ten years ago and which has never been published. The representatives of the Competition Council say no proof was discovered about a possible understanding between banks in 2008, and that the investigation was finalised in 2013.



    The spokesman for the National Bank Dan Suciu has reacted to the allegations saying the ROBOR market functions in a very transparent manner and is constantly made public by the National Bank: “The National Bank has as main objective the stability of prices, that is inflation. The main instrument it uses is the monetary policy interest rate. It is around these monetary policy interest rates that the variation corridor is established. The ROBOR fluctuates on the market depending on this variation corridor. Thats how the market works all over the world.



    The representatives of the National Bank of Romania also say that the depreciation of the national currency in recent days should not be a reason for concern. The Banks strategy advisor Adrian Vasilescu says that since the start of the year the leu has only depreciated by 0.6% and that the National Bank can only intervene if this level is in the region of 4 or 5%. Economic analysts say an exchange rate that is closer to the realities of the Romanian economy would be 4.75 lei for one euro. In their opinion, the leu will continue to depreciate in the coming period. (Translated by C. Mateescu, edited by D. Vijeu)

  • November 8, 2017 UPDATE

    November 8, 2017 UPDATE

    FISCAL AMENDMENTS -The Romanian Government on Wednesday
    adopted a series of amendments to the Fiscal Code. Finance minister Ionut Misa
    claims the amendments bring significant benefits to both citizens and
    companies, such as a cut from 16 to 10% in the tax on income, that is salaries,
    pensions, rents, interest rates, copyrights and others. There will also be a 2%
    cut in social contributions, which will be transferred from employers to employees.
    According to Misa, all these measures will have as main effect an increase in
    the employee’s net income, without the employer’s paying more to the state
    budget. In exchange, the right wing opposition has vehemently criticised the
    amendments promoted by the government. The leader of the National Liberal
    Party, Ludovic Orban, deemed them a calamity and announced his party will
    initiate and table a censure motion against the Tudose cabinet. He also added
    the National Liberal Party will make use of all legal and constitutional forms
    of protest to prevent the implementation of those fiscal aberrations, which run
    the risk of ruining the Romanian economy. The big trade confederations have
    repeatedly said that the amendments will actually reduce the employees’ incomes
    and announced that protests will continue at national level, and might
    culminate with an all-out strike.




    CURRENCY -
    The national currency, the leu, on Wednesday continued to lose ground against
    the Euro, plummeting to the lowest level in the past five years. The leu also depreciated significantly on
    the inter-banking market against the USD and other currencies in the region,
    amid growing uncertainty caused by the government’s adoption of amendments to
    the fiscal code, harshly criticised by trade unions, employers’ associations
    and economic analysts.




    EBRD – Romania’s economy could report a 5.3% economic growth,
    which is estimated to go down to 4.2% in 2018, reads the latest forecast issued
    by the European Bank for Reconstruction and Development (EBRD). Previous
    estimates pointed to a 4% growth for 2017 and 3.5% for 2018. The National
    Forecast Committee last week also revised its economic growth forecast to 6.1%
    in 2017 as compared to the previous estimate of 5.6%. In October the IMF upgraded
    its economic growth forecast for Romania from 4.2% to 5.5%.




    DEFENCE – Security in the Black Sea area and
    Romanian-American military cooperation in Afghanistan were the focal points of
    the talks held in Brussels on Wednesday by Romanian defence minister Mihai
    Fifor and his American counterpart, James Mattis. Relative to the bilateral
    Strategic Partnership, Fifor said he talked with the US defence secretary about
    consolidating NATO’s advanced presence on the eastern flank, laying emphasis on
    the United States’ participation in the Black Sea region initiatives. The two officials held talks on the sidelines of the meeting of the NATO defence ministers.




    THE KING – King Mihai I of Romania is in grave
    condition at his house in Switzerland, which is why no event will be held to
    mark his name day on the feast day of Saint Archangels Michael and Gabriel. On
    Tuesday Mihai was administered the Holy Eucharist, after on Monday the Royal
    House announced his condition had taken a turn for the worse. Aged 96, the King
    is suffering from two forms of cancer. Ascending the throne in 1940, Mihai I
    was forced to abdicate and go into exile in 1947 by the new communist
    authorities. Mihai I returned to Romania only after the anti-communist
    revolution of 1989, when he regained Romanian citizenship and part of the
    estates seized by communist authorities.




    ENERGY – Romania has stepped up its negotiations with China with a
    view to building reactors 3 and 4 at the Cernavoda nuclear power plant and a
    new black coal unit at the Rovinari thermal power plant, Energy Minister Toma
    Petcu said on the sidelines of a ministerial conference held in Bucharest,
    attended by a Chinese delegation. In turn, Foreign Minister Teodor Melescanu
    expressed Romania’s interest to taking part in projects fostered as part of the
    new Silk Road project in China. Melescanu highlighted Romania’s strengths in
    this respect, its geographic position and its transport facilities, the port of
    Constanta, the Danube and the Danube-Black Sea canal.




    EUROSTAT – 25.8% of Romania’s population was
    employed in agriculture in 2015, placing the country on the top position at EU
    level, against a community average of 4.4%, reads the latest report made public
    by Eurostat. In 2015 some 10 million EU citizens worked in agriculture, of
    which 7.5 in Romania, Poland, Italy, France, Spain, Bulgaria and Germany.
    According to Eurostat, the rate of completing higher education studies varies
    between 1.6% in Romania and 25% in the UK amongst agriculture workers. Finally,
    Romania has the lowest rate at EU level, 1.5%, in terms of full-time
    agriculture workers, as compared to the EU average of 16.4%.




    THE POPE – Pope Francis has accepted an
    invitation to become honorary member of the Romanian Academy, extended by an
    official delegation of the Academy at the Vatican on Wednesday. The Pope
    accepted the distinction, underlying his friendly relations with Romania. The
    award will be sent to the Holy See by the Apostolic Nunciature in Bucharest.
    Pope Francis is the second pope to be named honorary member of the Romanian
    Academy, after John Paul II, who became a member in 2001.




    CATALONIA – Spain’s Constitutional Court on
    Wednesday officially revoked the unilateral declaration of independence adopted
    on October 27 by Catalonia’s Regional Parliament. According to pundits, the
    decision was an expected step to be taken by the Madrid authorities, after the
    secessionist move had already been suspended in court. Trade unions in the region called an all-out
    strike on Wednesday, to protest against the actions taken by the Spanish
    justice against the former Catalan government. Radio Romania’s correspondent in
    Spain says roads have been blocked, railway traffic has been brought to a halt
    and all activities in schools and institutions have been suspended. One Tuesday
    some 200 Catalan mayors and pro-independence MEPs met in Brussels with the
    former Catalan leader Carles Puigdemont, which faces harsh accusations levelled
    by Spain, after having favoured the organisation of the so-called
    pro-independence referendum. Although he is being prosecuted, Puigdemont has
    made public his acceptance to be the main candidate of his party in the future
    span ballot called for December 21, by the Spanish government.


    FOOTBALL -
    On Thursday Romania’s national football team is playing Turkey at home in Cluj
    Napoca, central Romania, and will next play the Netherlands on November 14.
    Both games are friendly. Coach Cosmin Contra has called up 30 players, of whom
    17 play for clubs abroad. The two games are bound to prepare preparations for
    the 2020 European Cup preliminaries. Romania failed to qualify to the 2018
    World Cup to be hosted by Russia, after a subpar campaign with German Christoph
    Daum at its helm. We recall Romanian Mircea Lucescu is currently Turkey’s
    headcoach.

  • June 21, 2017 UPDATE

    June 21, 2017 UPDATE

    NO CONFIDENCE MOTION – The Romanian Parliament on Wednesday adopted the no confidence motion tabled by the ruling coalition made up of the Social Democratic Party and the Alliance of Liberals and Democrats in Romania against its own government, led by PM Sorin Grindeanu. 241 MPs endorsed the motion, exceeding the minimum number of required votes, that is 233. The other parliamentary parties, the National Liberal Party, the Save Romania Union, the Democratic Union of Ethnic Hungarians and the Peoples Movement Party refrained from voting, saying the issue was an internal problem of the coalition. The motion was tabled after the prime minister refused to step down and the coalition parties withdrew their political support. Grindeanu dismissed as ungrounded the conclusions of a report drafted by PSD and assessing the activity of the cabinet six months after it took office, a report which signalled delays in implementing the governing program. President Klaus Iohannis will hold talks with the parliamentary parties on Monday on the formation of a new government, his spokesperson has announced.



    THE NATIONAL CURRENCY– The Romanian national currency, the leu, on Wednesday plunged to a new record low, against the backdrop of the current political crisis. The National Bank of Romania announced one Euro stands at 4.59 lei, plunging to a record low since August 2012, when the leu sold for 4.64 lei, against the backdrop of another political crisis, generated by the suspension of the then president, Traian Basescu.

    ECONOMIC
    POLICY-     The IMF Resident Representative for Romania and Bulgaria,
    Alejandro Hajdenberg recommends to the Romanian authorities to show fiscal
    prudence after having recently operated many tax cuts and having increased
    salaries and pensions. He says a cautious salary policy is very important to
    protect the competitiveness of the Romanian private sector on foreign markets.
    The fight against corruption should also be continued, Hajdenberg added.



    FARMING – Business in the farming sector has doubled in the last seven years, to reach some 3,5 billion euros in 2015, reads a recent KeysFin survey. Over 7,000 enterprises with more than 40,000 employees are currently operating in the field, a number which went up by nearly 30% as compared to 2009. The KeysFin analysis also shows that, according to the latest data provided by the European Commission at the end of May, Romania has become the main cereal exporter at EU level. On the other hand, National Bank Deputy Governor Liviu Voinea said Romania has been making constant progress in bridging the development gaps separating it from other developed states.



    SUMMER EUROPEAN COUNCIL – President Klaus Iohannis will attend the proceedings of the Summer European Council in Brussels, on Thursday and Friday. On the sidelines of the summit, Iohannis will have bilateral talks with his French counterpart, Emmanuel Macron. The Romanian President flies to Brussels directly from Germany, where he paid a visit during which he met on Monday with his German counterpart Frank-Walter Steinmeier and the federal chancellor, Angela Merkel. We recall that in early June, the Romanian presidents foreign policy agenda included a 5-day working visit to the US, during which he had a meeting with US President, Donald Trump, at the White House.



    2017 SELECTUSA INVESTMENT SUMMIT- 23 Romanian delegates representing 17 companies from the mining, ICT, engineering and distilling industries attended the SelectUSA Investment Summit in Washington, over June 18 and 20. The Summit is the highest profile event to connect global companies and U.S. economic development organizations to facilitate business investment in the United States. This year’s Romanian delegation was the largest in history to the SelectUSA Summit, more specifically a 600% increase over last year’s. Delegates have each had numerous matchmaking meetings with US Companies and Economic Development Organizations. “We are thrilled to welcome 23 Investors to the Summit and to the United States, said U.S. Ambassador to Romania Hans Klemm, who underlined that “the Summit brings business opportunities and resources from across the United States together in a single place, enabling participants to complete weeks of work in fewer than three days. Attending the event was also the U.S. Secretary of Commerce Wilbur Ross, who said “this is an exciting time for global companies to explore the U.S. market and find partners that can help them create a footprint, expand operations, and achieve growth. There is no better place to make those connections than this Summit.



    CONSTITUTIONAL COURT – The Constitutional Court of Romania ruled that any persons with an expired prison sentence, who have been pardoned or rehabilitated or whove been sentenced for something that is no longer considered a crime, can be members of the Government. Court judges claim the law is inconsistent in this respect, as someone who is criminally prosecuted cannot be part of the Government, although he can be president or a member of Parliament. The Court thus responded to a notification filed by the Ombudsmans Office earlier this year. The legislation in force did not allow Social-Democrat leader Liviu Dragnea to be Prime Minister, after his party won the December 2016 legislative elections. Dragnea got a suspended sentence for election fraud attempt in the 2012 referendum to impeach the then president, Traian Basescu.



    FINANCING – Over 400 million euros will be made available for funding Romanian SMEs after the European Investment Bank signed funding protocols with six local banks. Based on these agreements, banks can give loans both for starting SMEs as well as for developing those already on the market. The collaboration agreement between the EIB, the European Commission and the Government of Romania was signed in October last year.



    GAC – State Secretary with the Romanian Foreign Ministry Bogdan Manoiu on Tuesday attended the General Affairs Council meeting held in Luxembourg, focusing on preparing the European Council meeting of June 22-23. The Romanian official said security and defence measures to be adopted must be balanced, lead to more cohesion between Member States and ensure added value for the EUs security contribution and its complementarity with NATO measures in this field. At the same time, Secretary Manoiu reiterated Romanias interest to implement all measures aimed at strengthening the EUs external borders. Referring to migration, the Romanian official underscored the need to consolidate progress reported in cooperation with countries of origin and transit countries based on the Partnership Framework adopted in 2016. Bogdan Manoiu also expressed Romanias readiness to continue dialogue in order to identify a consensual solution in terms of reforming the Common European Asylum System.



    ATTACK –Belgian prosecutors say the suicide bomber shot dead by the police on Tuesday evening in Central Station in Brussels was trying to detonate a gas and nail bomb he was carrying in a suitcase. The bomber was a Moroccan citizen, aged 36, whose home has been searched by the Belgian security forces. They found items showing the bomber might have been an ISIS supporter. In March 2016 Brussels was hit by a wave of suicide bomb attacks at the airport and the subway system, which killed 32 people. The attacks were claimed by the Islamic State terrorist organisation.



    US-UKRAINE RELATIONS – US President Donald trump on Tuesday met in Washington with his Ukrainian counterpart, Petro Poroshenko, on the very day the White House announced harsher sanctions against Moscow, whom they accuse of supporting pro-Russian rebel separatists in Eastern Ukraine. Russian immediately criticized the call and promised to retaliate. Broke out in 2014, the conflict in eastern Ukraine has so far killed over ten thousand people. The US and its European allies have called on Russia to observe the Minsk ceasefire agreements of 2015. The White House said that sanctions regarding the Crimean Peninsula, which Russia has illegally occupied wouldnt be lifted unless Moscow withdraws its troops from the region.

  • January 4, 2016 UPDATE

    January 4, 2016 UPDATE

    COLD WEATHER – The wave of cold weather which is sweeping the region has hit Romania, where temperatures dropped to minus 16 degrees Celsius. Three people died from the cold and scores have been hospitalised with hypothermia. Bucharest authorities decided to start offering hot tea and hot soup to the homeless. Snow has disrupted road traffic in the south and south west of the country and rendered air traffic difficult. Speed restrictions have also been imposed in places and many trains have failed to arrive on time. Several ports on the Black Sea Coast have also been closed down.



    CURRENCY – Romanias national currency, the leu, will this year maintain its stabilization trend against the Euro, but it will slightly depreciate against the US dollar. The forecast was made by the Financial – Banking Analysts Association in Romania, according to which the national currency will be mostly influenced by external factors. The President of the Association, Radu Craciun, has said that, although Romanias perception at international level is very good, the leus exchange rates will very much depend on the dynamics of the volatile currency markets. On the other hand, he has warned that certain promises made in the run-up to the 2016 local and legislative elections might raise worries among the foreign investors, and this could impact the evolution of the exchange rate.



    MOLDOVA– The Prime Minister Designate of the Republic of Moldova (a former Soviet state with a predominantly Romanian speaking population), the technocrat Ion Sturza, could not ask for a vote of confidence in Parliament on Monday because of a lack of quorum. The Sturza cabinet had however stood slim chances to get Parliaments endorsement, because the Prime Minister Designate failed to secure the needed 51 votes in order to take office. We recall that on December 21, the President of the Republic of Moldova, Nicolae Timofti, designated Ion Sturza, a businessman and former Prime Minister in 1999, for the position of Prime Minister, in the absence of a parliamentary majority willing to assume responsibility for the new cabinet. If President Timofti nominates a new candidate for the position of Prime Minister, who fails again to get Parliaments endorsement, the Moldovan President will be forced to dissolve Parliament and to call snap elections. The former cabinet, led by Liberal Democrat Valeriu Strelet, was sacked on October 29, under a no-confidence motion filed by the pro-Moscow left and voted by the Democratic Party.



    SEVERED DIPLOMATIC TIES – The EU and the US have launched an appeal for calm after Saudi Arabia, a country with a majority Sunni population, severed diplomatic ties with Iran, a country with a predominantly Shia population. The EU calls on the two sides to show restraint and responsibility, and the US Department of State said diplomatic relations are instrumental in solving differences between the two sides. Saudi Arabia cut diplomatic ties with Iran, after its embassy in Tehran was stormed by violent protesters, discontent with the execution by the Riyadh authorities of Shiite cleric Nimr al-Nimr. Sheikh Al Nimr, a harsh critic of Saudi Arabias ruling Sunni dynasty, was accused of terrorism, conspiracy and breaking the oath of allegiance to the sovereign.



    REFUGEES– The Swedish authorities, overwhelmed by the huge inflow of migrants, on Monday instated new controls on the border with Denmark, France Presse reports. Everybody who crosses the Ostersund Bridge, which is the main gateway used by the refugees, must present an ID. The measure also applies to those who come on board ships departing from the Danish and German ports on the Baltic Sea. Sweden, where over 20% of the residents are of foreign origin, received over 160,000 refugees in 2015 alone. In turn, Denmark on Monday temporarily introduced controls on the border with Germany, to prevent the entrance of migrants without valid travel papers.


    (Translated and edited by Diana Vijeu)