Bloomberg News

Leu Gains as Stimulus Bets Outweigh Romania Political Turmoil

August 23, 2012

The leu strengthened as increased global appetite for riskier assets on bets the U.S. Federal Reserve will provide monetary stimulus outweighed concern that Romania’s political turmoil will intensify.

The leu appreciated as much as 0.3 percent to 4.4952 per and traded 0.1 percent higher at 4.4863 by 5:30 p.m. in Bucharest after weakening 0.3 percent yesterday. Yields on Romania’s dollar-denominated bond maturing in 2022 fell three basis points, or 0.03 percentage point, to 5.69 percent today from 5.72 yesterday.

European and emerging-market stocks rallied after minutes of the Fed’s last meeting showed many members favored more stimulus unless the pace of the economic recovery picks up. The power struggle between President Traian Basescu, whose impeachment referendum was invalidated by a Constitutional Court on Aug. 21, and Prime Minister Victor Ponta may continue until general elections are held in the fourth quarter. Ponta has in the past said future collaboration with Basescu is “impossible.”

“The market mood has improved overnight with the release of Federal Reserve’s minutes,” Vlad Muscalu, a senior economist at ING Groep NV in Bucharest, wrote in a report to clients today. “The leu has moved back to 4.48 per euro and looks to firm a bit more. For the moment, it looks to be lacking the vigor needed to clearly break past the 4.47 percent recent high.”

The leu has lost 3.6 percent against the euro this year, the third-worst performer among emerging-market currencies tracked by Bloomberg.

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


Tim Cook's Reboot
LIMITED-TIME OFFER SUBSCRIBE NOW
 
blog comments powered by Disqus