“Last month, foreign exchange rate fluctuations created losses for Mobex of 1.5 billion ROL since the company exports 95% of its products, with payments being made both in euros and US dollars. If this situation continues, we could lose our competitive advantage on foreign markets. The last time the US dollar dropped we were hit by financial blockage and were one step away from shutting down. In my opinion, the strengthening of the ROL can only be of benefit to companies that import products and sell in ROL on the Romanian market,” said Dan Egri, general manager of furniture producer Mobex Targu Mures.
There was drama yesterday for those exchanging dollars or euros into ROL on the foreign exchange market. Billions of ROL were lost overnight following the sharp decline in exchange rates in Bucharest.
Yesterday saw further decreases, though the interbank market had somewhat calmed since Wednesday when the strong fluctuations and the sudden dive of the euro and the dollar left signs of shock on dealers’ faces and holes in clients’ accounts. The single European currency fell a further 284 ROL yesterday, according to the rates announced by the National Bank of Romania, dropping to 39,447 ROL. The US dollar dropped 568 ROL to 30,710 ROL. After the changes seen this past month, and in particular those of recent days, the value of the US dollar returned to the level seen in autumn 2001.
The euro has lost 1,670 ROL and the dollar 1,885 ROL since earlier this year. The resolution by the National Bank to allow the market to decide the exchange rate and to no longer intervene by buying foreign currency has upset exporters and employees whose salaries are paid in euros and dollars and whose income is shrinking by the day – a 500 dollar salary in January of this year meant 16,297,000 in ROL, but is now worth only 15,355,000 ROL.
“This sudden drop is very much to our disadvantage. We have learnt that the National Bank has decided to stop intervening, but hope it will go back on its decision, especially since the winter holidays are coming and demand for foreign currency generally goes up at his time of the year. We hope that the euro will return to 41,000-41,500 ROL. On the other hand, we cannot cancel the export contracts that we have signed,” said Georgel Costache, general manager of Vincon Vrancea.
Romanian exports amounted to 13.9 billion euros in the first nine months of the year, of which European Union countries absorbed 73.3%.
On a positive note, holders of foreign currency loans and importers have reason to rejoice, since their ROL payments are decreasing. Real estate acquisitions negotiated in foreign currencies will also benefit.
“I cannot fully estimate the impact that will be felt by the automobile market, but it is certainly a good thing for sales. It remains to be seen exactly how long this growth will last,” said Marius Carp, executive manager of the Romanian Association of Automobile Producers and Importers. zf@zf.ro