Isarescu goes for "constructive ambiguity"

National Bank of Romania Governor Mugur Isarescu explained that when the central bank mentioned the possibility of the ROL going down faster, that is the ROL/USD exchange rate increasing, he did not necessarily mean monthly evolutions.
“So if the ROL did not drop in November, it may do so in December or in January. Or it may very well go up,” Isarescu said.
NBR officials had hinted in October that the central bank would agree to and even support a faster dollar gain against the ROL compared with the previous months.
“We never meant to say the ROL must depreciate faster, we just said it might happen, therefore foreign currency loans should not be granted so easily. But when we said this, we were talking about disinflation, about the role of the exchange rate in the disinflation process and so on,” the governor added.
After a ROL/USD exchange rate increase by several hundred ROL in a short time, as indirectly suggested by the NBR, the market stopped and the trend reversed. NBR even sold foreign currency to make up for the liquidity shortage. This unforeseen exchange rate decline caused part of the banks to lose money. The USD gained only 0.2% against the ROL in November, which means an insignificant gain for those that bet on the dollar.
Isarescu specified that when the exchange rate was discussed, no forecast had been made. “Anyway, if I were to talk about someone in particular, I would not have meant the dealers on the forex market. They are the last people on Earth I’d tip about the development of the exchange rate to help them make easy money,” Isarescu says.
The governor has a special message for dealers: “the message NBR and I would like to convey is ‘the more they struggle, the more they learn exactly how hard it is to make money on a competitive market’.”
Until 2001, the dollar was always going up on the forex market. Starting mid last year, things have changed. The dollar became slower to go up. For instance, the ROL/USD exchange rate went up only 6%, that is below the inflationary rate. On the other hand, the euro has gained nearly 20% against the domestic currency.
This year was even “weirder” for the dealers, who had more work to do and a harder time figuring out what foreign exchange rate policy the central bank was applying. For instance, they were simply puzzled yesterday when the NBR intervened on the forex market and decided to indirectly buy foreign currency.
Isarescu introduced a new concept in the indirect message conveyed to those operating on the forex market: “constructive ambiguity.” He concluded by quoting a central, famous contemporary banker, “if you got more than 20% of what I just said, then I must have said it wrong.”