ING Sees Romanian Leu Firming To 4.05 Vs Euro On Short-Term

04.22.2011 By Florentina Dragu

Romania’s leu is likely to trade near 4.05 per euro in the next few months, benefiting from a substantial narrower current account deficit, ING Bank said in a report Friday.

Romania's leu is likely to trade near 4.05 per euro in the next few months, benefiting from a substantial narrower current account deficit, ING Bank said in a report Friday.

The country's current account gap shrunk to EUR44 million at the end of February, from a deficit of EUR747 million in the year-earlier period, supported by a narrower trade deficit.

ING revised its forecast to Romanian trade deficit to 4.1% of the gross domestic product, from 5.6% of GDP previously.

"The fact that the adjustment of the external shortfall is likely to continue this year is positive for the Romanian currency," the report noted.

The analysts estimate the leu will trade near 4.0 per euro in May and between 4 and 4.05 per euro in June.

However, the leu is bound to retreat versus the European common currency in the second half of 2011, once inflation gives in and the slowdown in exports will become more visible, ING said.

The Romanian leu has gained 4.5% against the euro since December 2010, its official reference rate hitting a 13-month high of 4.0858 units on April 20.