ROL emerges victor in dollar-euro battle

Those that bet on the single European currency again at the beginning of this year, relying on the history written for several months now, seem to have been mistaken. This is because figures showed the dollar was on top in January.

Even though the heavy ROL/USD exchange rate fluctuations at the beginning of this year induced (and will probably continue to do so) a certain reluctance towards a possible investment in the American currency, the first month of 2004 brought a 0.5% yield to those that bet on the dollar. As a comparison, its archrival, the euro, became 1.2% weaker.

As if to verify once more than nothing lasts forever, the euro fans a year ago were basking in the glowing yield of their euro investments, 2.7%, far above all expectations and any monthly yield on the Romanian market.

The growth of the single European currency against the ROL in the last couple of years, which reached nearly 25% in 2002 and another 18% in 2003 has turned it into an investment darling and this happened much faster than even the most optimistic analysts would have expected.

Now that the central bank is exerting tighter control on the ROL/EUR rate, and has decided to increase the euro’s share to 75% in the currency basket it uses as a benchmark, things may be up for a change. The high EUR/USD rate volatility, which could occur on the foreign markets, will make an even heavier impact on the ROL/USD exchange rate fluctuations and implicitly, those with an appetite for risk could make a lot of money out of dollar-related speculations.

That the banking deposits, whose interests keep rather high, are one of the safe alternatives to foreign currency worthy of consideration, is obvious. The monthly yield of a ROL deposit last month was 1.23-1.26%, far higher than that of any other investment. All the more interesting since it did not entail too much of an effort.

How do those people managing the money see the future?

“It is obvious that whoever bet on the ROL stood only to gain at the beginning of this year and, from the look of things, the domestic currency will remain the most profitable investment all through the year. As for a foreign currency investment option, I think the euro is more profitable for short-term, because even though I do not see the visibly upward trend of the European currency maintaining at the same level on the international markets, this currency is taking roots and is becoming a benchmark for almost every single transaction out there. Still, with the long-term in mind, I believe the dollar remains an option (…),” said Adrian Parvulescu, chief arbitrageur of Banca Comerciala Romana (Romanian Commercial Bank – BCR).
oana.nuta@zf.ro