Bankers: No big changes in 2007 exchange and interest rates

The RON will continue to strengthen in real terms next year, yet interest on loans contracted in RON will not witness much of a decline, believe bankers who were invited to the “How will interest and exchange rates evolve in 2007?” seminar organised by ZIARUL FINANCIAR and ING Bank. According to estimates, there is a good chance that exchange rates at the end of 2007 will revolve around the current level of 3.5 RON/EUR. The very high current account deficit and the possibility of changes in the appetite of speculative investors for investments on the emerging markets are the main factors that could put pressure on the RON depreciating next year. However, the domestic market remains attractive, which in turn will strengthen the RON, and will be driven by foreign investment and productivity gains. “I am optimistic about the exchange rate. I see the euro at 3.55 RON at the end of this year and at 3.45 RON in December 2007,” says Florin Citu, chief economist of ING Bank. Citu feels that the trend of the exchange rate will be much more volatile in the future, which could possibly lead to the euro standing at either 3.3 RON or 3.6 RON at some point. ING Bank’s top man, Misu Negritoiu, continues to believe the RON is overvalued and the NBR should contemplate a long-term controlled depreciation of the currency, before moving to the exchange rate mechanisms that precede the shift to the euro.