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Romanian Leu Eases Further vs Euro on Domestic Political Instability, Global Risk Aversion

Oct 2, 2009, 6:29:06 PMArticle by Tsvetelina Gavrilova
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October 2 (SeeNews) - The Romanian leu continued to slide against the euro on Friday as the collapse of the ruling coalition in Bucharest and increased risk aversion on global markets put pressure, dealers said.

Romanian Leu Eases Further vs Euro on Domestic Political Instability, Global Risk Aversion

The leu ended at 4.2730/2760 per euro, compared to 4.2570/2620 per euro on Thursday.

“There was a cumulus of factors,” one dealer told SeeNews. Woes on Romania’s economic fundamentals and Thursday's break-up of the country’s government coalition combined with weakening risk appetite and falls on the U.S, Asian and European stock markets, he said.

The leu depreciated to 4.29 per euro in the early hours of trading before rebounding to 4.28 per euro where it stayed most of the time.

All ministers from left-wing Social Democratic Party stepped down on Thursday after President Traian Basescu endorsed the dismissal of Interior Minister Dan Nica, affiliated to the party.

Prime Minister Emil Boc, who also is leader of centre-right Democratic-Liberal Party, the other party in the nine-month old coalition cabinet, on Monday dropped Nica as Interior Minister and Deputy Prime Minister, saying that Nica's statement about a possible vote-rigging in the forthcoming presidential elections is unfounded and inappropriate for a cabinet member. On Tuesday he nominated PD-L member Vasile Blaga to replace Nica.

Romania’s central bank, BNR set its reference exchange rate at 4.2782 per euro on Friday, compared to 4.2495 per euro on Thursday. For the U.S. dollar, the BNR set its reference exchange rate at 2.9414 versus Thursday’s 2.9163.

Turnover on the interbank leu deposit market fell to 1.729 billion lei on Thursday from 2.467 billion lei on Wednesday. The BNR will issue Friday’s turnover figures on Monday.

Interest rates on overnight leu deposits fell to 10.97%/11.51% on Friday from 11.72%/12.23% on Thursday.

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