NBR to drop currency basket

The National Bank of Romania (NBR) may start quoting its domestic currency, the ROL, entirely against the euro as of next year, NBR Governor Mugur Isarescu says. The Romanian economy could therefore be more exposed to the higher volatility of the EUR/USD rate on the international markets, whose impact on the ROL is not that great now because of the use of the foreign currency basket. The central bank uses a currency basket comprised of the euro and dollar to gauge the performance of the ROL. The European currency’s weight in the basket was increased to 75% from 60% as of January 1, 2004, reflecting its weight in Romania’s trade, as well as in the structure of the foreign currency reserves managed by the NBR. The weight of the American dollar was lowered to 25%. “We’re moving closer to the EU and it’s almost a rule to reference only to euro,” Isarescu was quoted as saying by Bloomberg. The National Bank in March last year started to reference ROL’s exchange rate to the euro directly instead of going through the dollar, which had been the benchmark currency for the Romanian market until that time. ZF