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Nov 20, 2007 13:13 EEST
November 20 (SeeNews) - The Romanian leu on Tuesday lost ground in high volatility, touching a fresh 12-month low as Romania's deteriorating macroeconomic image prompted foreigners to sell lei, dealers said.
"The leu traded at 3.5030 per euro at around 11 a.m. [0900 GMT]," one dealer told SeeNews. "It is now [1040 GMT] at the level of 3.4930/60."
The leu last traded cheaper on November 14, 2006, at 3.5057 lei per euro, according to the central bank's data. It ended at 3.4850/70 on Monday.
The leu hit one-year low of 3.4870 against the euro on Friday.
"It's about the recent trend of depreciation, caused by a number of reasons, which gave much room for speculative moves on the market," the dealer said. "The widening current account, the changing of the inflation target by the central bank, the S&P negative outlook, but also the appreciation of the euro versus the dollar – all these factors work against the leu at the moment," she added.
Romania's current account deficit for the first nine months of 2007 rose by 76.5% on the year to 11.801 billion euro ($17.45 billion) due to a widening trade gap, the central bank (BNR) said on Friday.
Romania's trade deficit for the nine months through September rose by 67% year-on-year, reaching 12.265 billion euro on a FOB/FOB (free-on-board) basis, the central bank said in a statement.
Romania's worsening macroeconomic environment has put pressure on the leu for two weeks now since the BNR raised its annual inflation forecast for 2007 by 1.8 percentage points to 5.7%, beyond its target band of 3.0%-5.0%, and revised its end-2008 inflation projection to 4.3% from an earlier 3.7%. Consequently, global rating agency Standard & Poor's has revised its outlook on Romania from stable to negative.
($ = 0.6762 euro)
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