Romanian leu exchange rate under pressure as BNR highlights level‑volatility gap

Deputy governor of the National Bank of Romania, Leonardo Badea, explains that the nominal exchange‑rate level and its volatility are distinct concepts that affect macro‑financial balances differently. He notes that after significant devaluations in the 2000s and post‑2008 crisis, the leu has exhibited lower volatility than neighboring currencies, even as public sensitivity to further depreciation remains high.

Recent political turbulence – the dismissal of Prime Minister Ilie Bolojan’s government – combined with external factors such as high oil prices linked to the Middle‑East conflict, has led investors to sell euros and other euro‑denominated assets, pushing the leu down roughly 2 % against the euro on official rates and about 3 % on interbank markets. Analysts cite the political uncertainty as a major risk to the Romanian economy, potentially raising borrowing costs and straining the leu’s stability.

Badea stresses that assessing a currency’s value requires more than the nominal EUR/RON rate; indicators such as the real effective exchange rate (REER) and equilibrium models (BEER, FEER) are used to gauge fundamental value. The debate over whether the leu is over‑ or undervalued, and the role of BNR interventions in the foreign‑exchange market, continues amid the broader domestic fiscal consolidation and the need to meet EU funding targets.