The Romanian currency Leu's appreciation in 2011 could be supported by the stock exchange listing of Fondul Proprietatea and by a new cautionary agreement with the International Monetary Fund, according to an analysis by X-Trade Brokers.  Last year, the Ley depreciated by 8 percent against the US Dollar, the second biggest depreciation after the Hungarian Forint. The Leu was quite stable against the Euro last year, with only a 1.02 percent depreciation.

The Romanian currency already saw a few favorable movements and news in the first part of January this year, mainly when it came to its evolution against the Euro. “The expectations of the business environment are more optimistic this year, and an economy trust index based on an EC poll shows an improvement in perception […],” according to X-Trade Brokers.

“The Romanian economy could be finally out of recession during this year, and the markets take this into account, stabilizing the appetite for Leu. The upcoming listing of Fondul Proprietatea could have a potentially positive effect on the Leu, as it could attract external funds on the local capital market, after a very long break.... If the trading volumes will be considerable – and chances are they will be – then the amounts allotted to the fund and to the capital market could increase, creating a positive flow, although not a spectacular one – for the Romanian currency,” said Victor Safta, head of X-Trade Brokers Romania.

However, the compliance with several issues in the agreement with the IMF, among which the arrears target, still leave room for questions. “The National Bank could choose to gradually drop the key interest rate, but only if it didn't massively impact the exchange rate. A rate between RON 4.1 and RON 4.3 could be agreed by the BNR, but a risk factor is the evolution of the sovereign debt crisis in Europe,” according to Victor Safta.

The Romanian Leu reached a rate of RON 4.26 per EUR at the end of the session on Monday, January 10, while the rate against the US Dollar was of RON 3.3. Both rates were up compared to the previous session. Check the exchange rate on the BNR website here.

Corina Saceanu, corina@romania-insider.com