Romanian leu hits record low as euro climbs to 5.35 lei

On Tuesday the euro rose to 5.35 lei, marking the deepest level ever recorded for the Romanian leu, while the dollar also edged higher to 4.76 lei. Analysts attribute the depreciation to internal political deadlock, high budget and external deficits, and recent comments from rating agencies, although S&P's decision to maintain Romania's investment-grade rating gave markets a short-lived sigh of relief and pushed the BET index up over 4% on Monday.

The National Bank of Romania is expected to keep its policy rate unchanged, as inflation remains elevated and a weaker leu would raise import costs. For households, a softer leu translates into pricier imported goods, higher travel expenses and greater euro-denominated loan burdens. Companies reliant on foreign inputs face higher input costs that may be passed on to consumers, though the depreciation is expected to be gradual rather than a sharp slide. The broader European context, with a strengthening dollar and widening yield spreads between U.S. and German bonds, adds further pressure on the local currency.