December 8 (SeeNews) - The Romanian leu eased versus the euro on Tuesday pressured by the opposition Social Democrats' request to cancel Sunday's presidential run-off vote and repeat the elections, dealers said.
The leu closed at 4.2350/2370 per euro versus 4.2305/2345 per euro on Monday.
The leu opened at around 4.2330 per euro and was traded between an intraday low of 4.2400 per euro and an intraday high of 4.2240. The leu lost ground in the second half of the day after the announcement of the Social Democratic Party, the dealer told SeeNews.
On Tuesday, the Social Democrats asked the Constitutional Court to cancel the results of the presidential run-off vote held on Sunday and to repeat the elections over alleged fraud.
Final results issued by the Central Electoral Bureau, BEC, indicated that incumbent Traian Basescu has won 50.33% of the vote, while the PSD leader Mircea Geoana has come close second with 49.66% support. On Sunday evening, however, most local polling agencies gave Geoana a lead of 1.4-2.4 percentage points ahead of Basescu based on exit polls.
Delays in Romania’s new president taking office will mean a continuation of the political crisis in the country that has prevented the restarting of key reforms in the economy and justice system. Carrying out these reforms is the main condition for the release of the next installments of a 20-billion euro bailout package led by the International Monetary Fund (IMF).
"The exchange rate development depends now on what will happen in the country’s politics. If Basescu is confirmed as president, the leu might weaken further," the dealer added.
Basescu, as new president, should name the country's next prime minister who will have to form a new government. But it remains unclear how Basescu will succeed to gain approval for his nomination for prime minister, since he already failed to push through parliament his first two nominations. Opposition parties hold more than half of the seats in parliament.
If the formation of a new government is stalled until January the volatility on the Romanian financial markets is likely to persist, putting downward pressure on the leu and upside pressure on interest rates, local media quoted an ING Bank report on Tuesday. The bank's analysts said that potential early parliamentary elections in Romania could weaken the leu to around 4.5-4.6 per euro.
Romania's central bank, BNR, set its reference exchange rate at 4.2249 lei per euro on Tuesday, compared to 4.2141 on Monday. For the U.S. dollar, the BNR set its reference exchange rate at 2.8489 lei versus Monday’s 2.8449.
Turnover on the interbank leu deposit market slightly rose to 2.667 billion lei on Monday from 2.655 billion lei on Friday. The BNR will issue Tuesday’s turnover figures on Wednesday.
Interest rates on overnight leu deposits were up at 8.71%/9.21% on Tuesday from 8.37%/8.87% on Monday.