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Investing.com -- The National Bank of Romania (NBR) appears comfortable with the new trading range of 5.05-5.10 for the EUR/RON exchange rate, according to analysis from Erste.
This assessment follows comments from the NBR governor at the May press conference indicating that the Romanian leu (RON) is fairly valued in real effective exchange rate terms.
Erste analysts note that the central bank likely prefers to maintain the RON within this comfort range, as further currency weakness could add unwanted inflationary pressure to the economy.
The analysis points to high foreign exchange vulnerability due to Romania’s large current account deficit, elevated risk premiums, and potential sovereign rating downgrade risks. These factors may require a higher cost of carry to protect the RON’s value.
Based on Erste’s assessment of the NBR’s May 16 rate-setting meeting, the central bank maintained a slightly hawkish tone. The report identifies persistent inflation, financial stability concerns, and fiscal uncertainties as the main issues currently facing Romanian monetary policymakers.
The analysis emphasizes that high uncertainty remains a key topic for the central bank as it navigates Romania’s economic challenges.
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