Romanian Leu: Stability hinges on budget credibility - Societe Generale

EUR/RON is trading below 5.35, Societe Generale notes. The bank also points to 10-year RONGB yields below 7% following parliamentary approval of the Niculescu government, which ended the political deadlock. Political stability remains fragile, the bank stresses, while highlighting the commitment to bring the deficit below 3% by 2030. To retain the Baa3 rating, Moody’s warns, the budget must be passed before year-end.

Baa3 rating hinges on fiscal discipline

"EUR/RON settled below 5.35 and the 10y RONGB yield stayed below 7% as the Romanian parliament approved the new government led by PM Niculescu, ending the political deadlock."

"Political stability remains fragile and conditional on the support of the Liberals and the ethnic Hungarians."

"In his governing program, Niculescu committed to stick to the plan agreed with Brussels to shrink the deficit to below 3% by 2030."

"Moody’s warned that political stability and credible budget are essential to maintain the country credit rating (Baa3). Avoiding a downgrade to junk means passing the budget before year-end."

(An editor reviewed this article, which was produced with assistance from an Artificial Intelligence tool. Learn more.)