ING: Don't bet on RON appreciation, you'll get burned

Those who bet on the RON’s appreciation to continue, after the unexpected exchange rate decline at the beginning of the month, are playing with fire and could be in for a surprise, write ING analysts in the report “The RON: If you play with fire, you’ll get burned”. At the beginning of the month, the euro took a sudden fall on the forex market, from 3.66 RON and reached a 3.52 RON low. The move was generated by the regional context, with international investors being interested in the higher yields experienced on the emerging markets. “We believe players who are betting on the appreciation of the RON are playing with fire. The RON has been caught in the upward trend of the entire region, but we must say this has nothing to do with improving basic economic indicators, as was the case in Poland and the Czech Republic,” comments Nicolaie Alexandru Chidesiuc, senior economist at ING Bank. After all, the last day of last week saw a cold shower; the RON react strongly to a change in regional sentiment and lost nearly 1% in a single day, falling back to over 3.6 RON/EUR. “It is too soon for an aggressively optimistic outlook of RON. The economy base remains weak – a never-ending story, and the situation does not look set to change any time soon (…), ” Chidesciuc added.