Romanian Leu: Managed stability and real appreciation – ING
Valentin Tataru at ING highlights that the National Bank of Romania’s preference for limited EUR/RON moves has anchored prices but fostered real appreciation.
ING's Valentin Tataru notes that the National Bank of Romania's strategy of limited EUR/RON fluctuations has stabilized the currency while prompting real appreciation. The leu has slipped from approximately 5.00 to 5.34 per Euro, while wages and costs domestically have grown faster than those of trading partners. This has raised concerns about potential overvaluation, decreased competitiveness, and a widening current account deficit.
Despite being formally floated, the leu has remained relatively stable, having traded around 5.09 in March 2026, 5.23 in May and 5.34 by early October. The NBR's policy of controlling large EUR/RON movements has significant benefits for an import-dependent nation, as a significant depreciation would rapidly increase the cost of imported goods.
The central bank now faces a choice between permitting some nominal depreciation, which could lead to short-term inflation, or maintaining stability and enduring a gradual decline in cost competitiveness due to rising domestic costs vis-à-vis those of trading partners. Romania has largely adopted the latter strategy, achieving stability with substantial wage growth and persistent inflation.
However, adjustments remain needed, redirected instead into real appreciation and a broader current-account deficit.
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