Dramatic week for the RON

Dealers are preparing for one of the most dramatic weeks on the forex market in the last 15 years, with the RON being subject to a strong and rapid appreciation, prompted by the sales of foreign speculators, with Romanian banks attempting to keep up with this current trend. On Friday, foreign investors’ aggressive sales brought the euro to 3.1340 RON at the NBR (National Bank of Romania) exchange rate, whilst a new five-year low of 3.1110 RON was reached on the market. However, everybody is expecting the NBR to intervene, which could take the euro back up to over 3.2 RON. Last week, the NBR did not intervene on the forex market, triggering losses for many dealers who were relying on the central bank to make a move, as well as causing the euro exchange rate to increase. In June alone, the euro lost 4.2% to the RON at the official exchange rate level. Calculated since the beginning of the year, the appreciation of the RON stands at 6.6% in nominal terms. This appreciation affects exporters, but also causes inflation to fall. Most dealers in Bucharest see the NBR as a preserver of their positions, since banks retain high volumes in euros, which they are eager to sell on the market at a higher exchange rate value. However, any decline in the euro against the RON causes losses, which cannot be recovered easily. Whereas three years ago, dealers in Bucharest called the shots on the forex market, now, the forex brokers in London, for RON/euro transactions, have significantly less power than in the past.