WB: Romanian Leu Set To Firm Vs Euro On Long-Term

04.19.2011 By Florentina Dragu

Romania’s leu is bound to strengthen against the euro on the long run, once living standards improve, Kaspar Richter, senior economist at the World Bank (WB) told MEDIAFAX Tuesday.

Romania's leu is bound to strengthen against the euro on the long run, once living standards improve, Kaspar Richter, senior economist at the World Bank (WB) told MEDIAFAX Tuesday.

Richter said short-term projects on the exchange rate are difficult, but the leu should follow an upward trend against the euro on the long-term.

The leu has lost a median 25% versus the euro since the crisis first hit at the end of 2008, reaching 4.2099 units in December last year.

In its April economic report, the World Bank said Romania's leu has gained 4% to 6% in nominal terms against the euro since October 2010.

Tuesday, the leu closed 0.1% up against the euro at 4.086 units.

The World Bank estimated Romanian inflation will enter a downward path in the second half of 2011, once the effects of a 5 percentage point raise in the value added tax fade away.

"In February 2011, inflation was highest in Romania, reflecting partly the impact of a VAT increase introduced in mid-2010, and is likely to decline in the second half of 2011," the report said.