Monday, September 17, 2007

Romania's Leu Falls to Six-Month Low on Signs Growth Is Slowing

By Ewa Krukowska

Sept. 17 (Bloomberg) -- Romania's leu fell to a more than six-month low against the euro on signs the pace of economic growth is slowing.

The leu declined for a fifth day, recording the biggest daily decline in almost two weeks, after separate reports showed the country's current-account deficit widened and the jobless rate rose. Romania's central bank said the current-account gap swelled to 8.97 billion euros ($12 billion) in July, from 7.81 billion the month before.

``The current-account deficit prompted investors to sell the leu,'' said Agata Urbanska, emerging-market economist at ING Bank NV in London. ``Markets are concerned about economic fundamentals and more weakening of the currency may be on the cards.''

The leu fell 0.8 percent to 3.3862 per euro by 5:20 p.m. in Bucharest, after earlier reaching the lowest since March 5. Urbanska forecast it would trade near 3.4 versus the single European currency this week.

Romania's unemployment rate rose to 3.9 percent in August following a drought, from 3.8 percent in July, the National Labor Agency said on its Web site today. The leu has been the worst- performer of 26 emerging market currencies against the euro in the past month, according to data compiled by Bloomberg.

In other trading, the Polish zloty declined to 3.7861 against the euro from 3.7792 on Sept. 14 after the statistical office said average corporate wages rose 10.5 percent in August, the fastest annual pace in almost eight years.

Central banker Marian Noga said after the report that one more interest-rate increase is needed this year to keep inflation in check. The Warsaw-based bank has boosted borrowing costs 75 basis points this year to 4.75 percent.

The Turkish lira declined for a second day, to 1.2665 against the dollar from 1.2643 on Sept. 14, while the Hungarian forint slipped to 254.84 per euro from 254.50. The Czech koruna fell to 27.48 versus the euro, after earlier reaching a record high, from 27.41 at the end of last week.

To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net

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