Romanian Economy Unlikely To Benefit From A Weaker Leu – Ctrl Bank

“A weaker exchange rate usually leads to increased competitiveness and hence to increased economic growth. However, you must have extra production capabilities or quick investments in sectors such as the agriculture, when a surplus of 10% makes all the difference because you can export it. But this is not the case in Romania,” Isarescu told a round table organized by the central bank.

Romania’s leu lost around 2% against the euro on the interbank market since the middle of last week, amid political tensions that ended in the President’s suspension by parliament. Since January, the national currency weakened by 4.7% versus the euro.

The weaker leu could give domestic producers a chance to step up production and reclaim the local market by “killing imports”, but they need investments to increase their production capabilities first, Isarescu said.