Bloomberg News

Leu Weakens to Record Low as Court Prolongs Political Turmoil

August 03, 2012

The leu weakened to a record low after Romania’s Constitutional Court delayed a ruling on the results of a July 29 referendum to impeach suspended President Traian Basescu, prolonging the political turmoil.

Romania’s currency depreciated as much as 0.6 percent today to 4.6520 per euro, the weakest intraday level on record, and traded at 4.6480 as of 1:44 p.m. in Bucharest. The leu has dropped 1 percent against the euro this week and lost 4.3 percent since the end of June, making it the world’s second- worst performing currency after the Sudanese pound, according to data compiled by Bloomberg.

The nine-member panel’s decision to postpone a ruling on whether the ouster vote is valid is prolonging the battle between Basescu and Prime Minister Victor Ponta as the government presents its progress on economic targets and stake sales to a joint mission of the International Monetary Fund and the European Union. The international lenders, which granted Romania a 5 billion-euro ($6.1 billion) precautionary loan, are in Bucharest for a quarterly review until Aug. 13.

“The ball remains in the Constitutional Court,” Vlad Muscalu, an economist at ING Bank Romania SA, wrote in a note to clients today. “The decision is quashing any remaining hope that markets will see some relief in the near run.”

The court will hold a meeting to discuss whether the referendum was valid on Aug. 31, it said in a statement on its website today.

‘Unprecedented’

“Such a situation is unprecedented,” Basescu told reporters in Bucharest today. “Trying to change the results of the referendum” after hearing the outcome shows the ruling coalition “has no scruples and it’s clear that their only interest is to control the judicial system,” he said.

The court postponed a judgment to have enough time to review electoral documents and voter lists after receiving conflicting data from the central electoral bureau, the Interior Ministry and the statistics institute, according to a court statement yesterday. The government must send an updated list of voters to the court so judges can decide whether the minimum turnout of half of eligible voters was met in order to validate the referendum.

According to the electoral bureau, turnout for the referendum, called by Ponta’s ruling coalition, was 46.24 percent, below the majority required under the constitution. Of those who took part, 87.52 percent approved Basescu’s ouster, while 11.15 percent chose to keep him in power. The lists included 18.3 million eligible voters.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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