PM Orban says trade deficit stressful to exchange rates, leading to erosion

National chairman of the National Liberal Party (PNL), Prime Minister Ludovic Orban, said on Monday that trade deficit puts "very high" pressure on the exchange rates and erodes the local currency, the leu, against the euro.

"The exchange rate is always a result of an economic situation. As long as there is a trade deficit of almost 18 billion euros, and the trade deficit has increased year by year, in 2017, in 2018, and in 2019 due to a policy of non-stimulation of domestic products and services, while at the same time boosting demand through artificial income increases, which has no base in economic reality trade deficit has deepened. The deficit normally puts a very high pressure on the exchange rates and leads to erosion. The erosion of the leu against the euro is a process that has happened since the Social Democratic Party (PSD) came to power, and it can only be halted to the extent that several factors get rebalanced - trade balance, budget balance - because even the widening of the government deficit generates additional pressure on the exchange rates and as far as the National Bank of Romania (BNR) can step in to prop up the leu that leads to economic reality, " said Orban after a convention of the PNL Executive Bureau.

The leu depreciated on Monday by 0.62 bani (0.13%) against the euro, with the European currency reaching a new historical high, and the rate set by the BNR is 4.7729 lei to the euro. BNR Friday's exchange rate was 4.7667 lei to the euro.