Isărescu enters into debate with businesspeople over "real exchange rate"

Governor Mugur Isărescu explained yesterday that the NBR (National Bank of Romania) intervenes to correct too ample exchange rate fluctuations that would harm the economy, but says the euro is not artificially kept at 4.2 RON. At the same time, businessman Dinu Patriciu said that currently the real exchange rate should be 4.7-4.9 RON per euro and that the NBR is wrong to artificially keep the euro at a lower level.

The depreciation of the exchange rate is seen by businesspeople as a method of encouraging exports and of reviving the economy, with their position being backed by the current clash between the United States and China, which are struggling to weaken their currencies.
“The real exchange rate currently is over 4.7-4.8 RON per euro. The fact that the National Bank artificially keeps the exchange rate at the current level is wrong,” Dinu Patriciu said yesterday.
Patriciu’s argument is that a “real” exchange rate would have given impetus to exports, with the businessman also saying the dollar is a more important currency for Romanian businesses than the euro is.
“Nothing is bought in euros. We buy all raw materials in dollars,” he said. Ever since the onset of the crisis, in the autumn of 2008, Patriciu has been in favour of a RON depreciation, and even talked about a 5 RON per euro exchange rate at one time.
On the other hand, Governor Isărescu says the problems of the Romanian economy are much deeper and have to do with the absence of structural reforms, and that exchange rate depreciation is a “simplistic” idea.