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Nov 23, 2007 11:35 EEST
November 23 (SeeNews) - Romanian leu hit a 22-month-low against the euro on Friday, as foreigners continued to leave the market, selling lei.
"At the moment [0920 GMT] the leu is already at 3.6820/40 against the euro," one dealer told SeeNews. The Romanian currency last traded cheaper at 3.6846 on January 5 last year.
It's a chain reaction among foreign investors who are scared of the massive downfall of the leu versus the European currency on one side and cautious towards the euro gaining against the U.S. dollar on the other, the dealer said.
The leu has been under pressure for almost three weeks, since the country's central bank 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.
Raiffeisen Bank Romania's chief economist Ionut Dumitru has told SeeNews that a healthy level of the Romanian currency would be in the range 3.40-3.50 lei per euro. At these levels the exchange rate would not affect negatively the Romanian exports, Dumitru said.
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