Bucşa, UniCredit: The national currency could fall to 4.9 – 5 lei/euro at the beginning of next year

The European currency could be worth 4.9-5 lei at the beginning of next year, Dan Bucşa, chief economist for Central and Eastern Europe at UniCredit Bank London, said on Monday, noting that the leu is overvalued compared to Central European currencies.

“As you know, I have this theory that every year the leu moves by 10 bani. It’s been a few years. And it will probably move next year. In the basic scenario, somewhere at the beginning of next year, as it usually happens, that the leu could move in the range of 4.90 and 5. Is that enough? No. If we’ll witness a risk scenario, then the leu might temporarily pass over 5. All is needed is theat the NBR would not intervene enormously to protect it, and in this situation it will easily go over 5. But probably after that the Central Bank will bring it back in this range, because it is looking at inflation and at those who have loans in foreign currency,” said Dan Bucşa, quoted by Agerpres.

According to him, the leu is “significantly overvalued” in relation to other Central European currencies.

Dan Bucşa specified that he has two criteria which he takes into account, one of them being the correlation with the production prices, in which case the leu would be overvalued compared to the currencies from the countries in Central Europe by 5-12%. If the model is correlated with the unit cost of labor, the overvaluation against the currencies in the area is of 10-33%.