Leu was reasonable "after one has been said on here"

The depreciation of leu in the last period was "reasonable" if they are considered domestic political tensions, but the decrease overcomes the economic fundamentals, even if Romania has a current account deficit quite high, that has to be funded, says BNR Governor, Mugur Isărescu, in a press conference to present a quarterly report on inflation.

"The leu was reasonable. It was poor thing? I mean 2-3-4 percent after what were said here. We had a higher inflation than the European average with 2-3 years. You know that one of fundamentals is just this, the inflation differential.

"Probably some depreciation was expected, in terms of fundamentals. But the inflation differential between us and the world, between us and Europe, was a few percent. And this year was almost reversed, so this should help the leu", said Mugur Isărescu.

The governor recognizes that Romania has a problem regarding the fact that unlike Poland, or even Hungary, our country has a large current account deficit, which even if it isn’t anymore 14 percent of GDP, somewhere at 4-5 percent of GDP has to be financed.

BNR official explained that when there is not funded and no institutional and national capacity to attract EU funds to finance, as it was built also the program with the IMF and the projection of economic growth, there remains a financing gap, which is fundamental.

Isărescu showed that decoupling the national currency towards the regional trend began in April-May.

"The factors have already been explained. It's the strongest link that Romania has both physical and psychological with the Balkans and with the crisis from Greece.

"What physically prompted the outflows and mentally a more unfavorable, more pessimistic, related to Romania and Romania's banking system and currency depreciation in the international markets", concluded the head of BNR(National Bank of Romania).

"Mouth beats ass"

BNR Governor, Mugur Isărescu, said on Monday that politicians will soon find that on the financial markets „the mouth beats the ass", the only solution being the dialogue, which should dominate the political discourse, and who doesn’t own it should go, without claiming to take out the others of the house.

"I use the words of a very good friend of Romania, personality in the financial world, who really told me:" Hey, you really do not have what to do? So judge the world, and we must not forget that this world is made ​​up of markets from where Romania takes significant sums to fund its budget deficit and to go on to pay salaries, pensions.

"So, here it's not a game of BNR and interference. This is to transmit clear signals that the country must move forward, institutions must do their duty.

"Everyone must do their duty, and in international finance respect, attention, also in internal finance, more than anywhere else, I say that the mouth beats the ass, and it beats him badly. And we don’t need such thing. It is a message that we repeat, "said Mugur Isărescu.

He pointed that BNR makes its duty, seeking to profit and to pay to the budget 80 percent of this amount, which helps the finance minister, Florin Gerogescu, to accomplish his objectives.

The national currency strongly appreciated in the first month of the interbank session due to indirect central bank intervention, according to dealers, so that the reference rate for the euro fell by 7.41 money at 4.5740 lei / euro, after it reached Friday a record level.

In Friday's session, the central bank currency rose to 4.6481 lei / euro, historical maximum, due to political tensions. The national currency resumed Thursday its depreciation, after the Constitutional Court announced that it postponed the referendum on President Băsescu's dismissal, following to check lists.

Reported to Friday, the leu has lost 7.6 percent since the beginning of the year, from 4.3197 lei / euro.

But the leu sharply depreciated in early July, up from 4.4 percent due to political turmoil.

In early July, proceedings to suspend President Traian Băsescu were initiated.

Translated by Alexandra-Diana Mircea

MTTLC, Bucharest University