Claudiu Cazacu, chief analyst at XTB Romania, says the reduction in industrial production prices registered in the past few months, may suggest a continuing decrease in the inflation.

“Thus, the National Bank of Romania has room to continue in the next months (by the end of the year) the monetary easing cycle. The reduction of the interest rate would support the real economy, and, under the conditions of a good performance in the agricultural sector, the GDP could grow by 2 percent,” said Cazacu.

He suggested the RON’s attractivity for investors could be hindered by the cut in the key interest rate, as the gap in interest levels on deposits between Romania and the Euro zone would narrow.

XTB says the EUR to RON exchange rate could reach 4.54 by yearend, while the USD to RON rate could reach 3.55 in the same period.

The brokerage said the RON’s good performance in the first semester can be pinned down to good macroeconomic figures and a surplus in the current account deficit. It added that a reduction in the FED’s Quantitative Easing program can put pressure on the RON and other currencies in the CEE. (source: business-review.eu)