The leu/euro exchange rate has returned to the depreciation trend it has been in for the last 5-7 years, Adrian Codirlaşu, vice-president of the CFA Romania Association, said on Friday, noting that the association’s survey for the next 12 months shows an exchange rate of 5.03 – 5 04 lei for one euro.

“Practically, the exchange rate has re-entered the depreciation trend it has been in for the last 5-7 years. In the last 5-7 years, it somehow depreciated by 0.10 lei per year, or somewhere at 2-3%, exactly the inflation differential between Romania and the Eurozone and practically now it has re-entered that trend. And the expectations, at least in the latest CFE Romania survey for the next 12 months, are of an exchange rate of 5.03 – 5.04 lei for one euro,” said Adrian Codirlaşu, according to Agerpres.

He stated that there are internal factors and external factors that lead to the depreciation of the leu. Romania has major imbalances in the economy, with the largest current account deficit in the EU and the largest budget deficit, being in the excessive deficit procedure with the European Union. These factors put pressure on the depreciation trend and to them are added the inflation differences between Romania and the Euro Zone, which also lead to depreciation. External factors are added to the internal factors, such as the increase in interest on the American market.

“When the Fed raises interest rates, automatically all other currencies suffer. And what is extremely important for the dollar, and the dollar is the only currency that has this situation, the Fed’s monetary policy interest rate is higher than inflation. So the interest rate has become real positive again. It hasn’t been real positive since 2008. Which is a very important thing and gives extremely high credibility globally to the dollar. And a real positive monetary policy interest rate on the dollar will have as an impact a slower reduction of monetary policy interest rates by the other central banks,” explained Adrian Codirlaşu.

The euro reached a new historical high against the leu on Friday, as the rate calculated by the National Bank of Romania (BNR) was 4.9783 lei/euro, up by 0.52 bani (0.10%) compared to the previous quotation, of 4.9731 lei.