Leu continues on downward spiral against Euro

In late September, the Leu hit yet another low against the Euro - a currency which Romania is set to adopt following its joining of the European Union in 2007.

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Strong-performing currencies

Known to many is that the US and UK economies are integral parts of the financial markets, as they are perceived as two of the most stable and strong-performing. Similarly, the USD and EUR are also some of the most popularly traded currencies, moreover, they also form part of some of the major currency pairs on the forex market. In light of this, it is no wonder that investors and forex traders alike remain interested in these currencies, as they often result in considerable returns for those who successfully trade them. Some of the other popular currencies are the GBP, CAD and JPY, amongst many others. However, these currencies do not operate in isolation on the financial markets. Despite the existence of other currencies, forex trading with Euros and American Dollars is often championed by many because of the relative stability it provides. As a result, investors are likely to bet on the strong-performing currencies over those that are volatile and prone to many currency fluctuations that are prompted by political and economic conditions. Although Euros and American Dollars are often used and exchanged in the capital city of Romania, Bucharest, the Leu remains the dominant standard throughout the country.

Romania adopting the Euro

There has, however, been much talk surrounding Romania’s imminent adoption of the Euro as its primary currency, which has led to an increased interest and comparison of the two currencies. This follows Romania joining the European Union in January 2007; it is thus expected to adopt the Euro once it has fulfilled the necessary conditions. Currently, it is reported that the country is not yet a member of the Euro zone, therefore, it has not yet joined the Exchange Rate Mechanism II. In 2018, it was announced that Romania would adopt the Euro by 2024, which was the initially set target. However, it seems that this has now been delayed, as recent reports on the matter suggest that it may be delayed to 2027 or even 2028. The delay is in no way a reflection of the citizens’ attitude towards the Euro’s adoption, on the contrary. A report revealed that 75% of those surveyed were in favour of its adoption.

Leu hits another low against Euro

With the above in mind, it is only fitting that we explore the relationship between the Leu and the Euro as it stands. On Wednesday, 22 September 2021, the Leu hit an all-time low against the Euro. According to the Central Bank data, the decline in its value is attributed to the growing political uncertainty. This is in light of ongoing policy clashes and intra-coalition tensions. Despite the uncertainty and a level of instability, the country’s economy has shown resilience and is said to have expanded by approximately 6.5% during the first half of 2021, which exceeded expectations and initial predictions of recovery post the global conditions of 2020. The recent low of the Leu against the Euro is not a first this year, in fact, in March 2021, similar reports circulated. At the time, the drop was reported to be 0.38%, while the September drop has been reported as 0.02%, compared to the previous day’s valuation.

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