Bloomberg News

Leu Drops Third Day Before Court Impeachment Meeting Tomorrow

August 20, 2012

Romania’s leu weakened for a third day and a domestic debt auction gathered the lowest demand since 2005 before a court meets to debate the presidential impeachment referendum tomorrow, which may prolong political turmoil.

The leu fell as much as 0.3 percent to 4.5015 per euro, extending its loss this year to 3.8 percent, the worst among emerging-market currencies tracked by Bloomberg. It depreciated 0.2 percent to 4.4969 per euro at 5 p.m. in Bucharest.

Romania’s Constitutional Court will meet tomorrow to debate whether a July 29 vote to impeach suspended President Traian Basescu is valid. The power struggle between Basescu and Prime Minister Victor Ponta in the past two months has pushed the currency to record lows and boosted borrowing costs.

“Political instability in Romania continued to put pressure on the leu, especially that tomorrow is the due date for the Constitutional Court to issue its decision upon the validity or invalidity of the referendum to recall President Basescu,” Piraeus Bank Romania SA analysts led by Camil Apostol wrote in a note to clients today.

The Bucharest-based Finance Ministry rejected all bids at an auction today, for the second time this month, the country’s central bank said. The administration had planned to sell 500 million lei ($137 million) in one-year treasury bills today, the Bucharest-based bank said on its website. Demand totaled 864 million lei for the bills, it said.

The yields for Romania’s 2015 euro-denominated bonds declined nine basis points, or 0.09 percentage point, to 3.95 percent, the lowest intraday level since the bonds started trading in 2010.

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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