The RON will continue to grow stronger in the medium term, say bankers, although it might take fluctuations in order to achieve this.
Misu Negritoiu, deputy chief executive of ING Bank, sees a depreciation of the domestic currency necessary in view of shifting to the euro, especially when considering the example of the Polish zloty.
At the same time, the lending in foreign currency will become more expensive, due to trends on the international markets, and interests on RON deposits should stabilise at real positive levels. When it comes to costs of the RON loans, opinions vary: the interest rates trend depends on inflation and NBR”s monetary policy (possible monetary policy rate increases or even the modification of the purging operations).
“ING”s research indicates an appreciation of the RON from 2007 through 2008, with the rate possibly going down to as little as 3.4 RON/EUR,” said Misu Negritoiu during the “Financial-banking market: challenges and opportunities” seminar organised by ZIARUL FINANCIAR.
Banca Comerciala Romana”s vice-chairman, Dan Bunea, in turn sees the domestic currency growing stronger. “There will be some discontinuities, but the (overall) trend will be upward as far as the RON is concerned in the medium and long term. I can confirm we have an estimate of 3.4 RON/EUR from 2007 to 2008.” On the other hand, Negritoiu says the exchange rate should follow a completely different trend.
“I see the depreciation of the RON as a necessity and it should be taken into account as a monetary policy goal.” NBR, however, sees itself forced to face other constraints in the meantime, most of the time contradicting each other, and the RON appreciation is an important lever to use in fighting inflation.
Negritoiu feels the depreciation of the RON is the only risk looming over crediting, especially on the foreign currency market. After all, he considers the trend to be free of risk. “In the case of foreign currency lending we look at the foreign-exchange risk and the depreciation of the RON, at a time when it is appreciating. I believe the RON should depreciate, and that (should happen) before we move to ERM (Exchange Rate Mechanism) II because we will have trouble if we join the European Union with an appreciating currency,” Negritoiu says.
Foreign currency lending turned out to be very dynamic last year, before NBR introduced harsh norms to contain such funding. The increase in the financial service sector was fuelled by the increase in the available income of the population.
BCR vice-chairman expects the foreign currency lending to become more expensive, given that interests on the international markets are on the rise and the NBR could resort to new increases in the minimal mandatory reserves made from the resources attracted in foreign currency. On the other hand, he believes interests on RON deposits should steady at a positive level, now that last year showed that a decline of such interests toward the negative area brings along inflationary outbursts.