Romanian turmoil hurting outlook for leu, boosting debt costs
2012-07-12 12:09:58
The political battle between Premier Victor Ponta and suspended President Traian Basescu will boost Romania’s funding costs and further weaken the leu, the world’s second-worst performing currency this month, economists and investors from London to Bucharest said.
The unrest triggered by a spat between Ponta and Basescu has raised investor concerns about the country’s commitment to fiscal discipline next year under an international bailout. The European summoned the premier to Brussels to discuss the row, while German Chancellor Angela Merkel, who has lauded the president for his support of austerity measures, warned Ponta of violating the bloc’s basic principles of democracy.
“We actually somewhat reduced our positioning in Romania due to this last week and we’re still in the process of considering further action,” Ronald Schneider, who helps manage about $1 billion in emerging-market debt at Raiffeisen Kapitalanlage GmbH in Vienna, said by phone. “The key is to end the uncertainty and whether to believe that the willingness of the government to cooperate with the International Monetary Fund is there.”