Exchange Rate Prophecies |
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The Romanian Leu to Euro exchange rate has been increasing steadily for some time now. Just to give you an idea, the exchange rate increased from 3.3157 on November 1st to 3.6221 on November 23rd (today). That's a 9.24% increase and today's exchange rate is a record for this year. There have been countless experts and specialists in and out of TV shows for days now, all with opinions and all sorts of arguments to back those opinions.
Many of those opinions sought to explain why it is happening but some people also came (were sent to this Earth) to tell us what will happen next. I won't reffer to any one person in particular but just to give you a few examples Mircea Badea (popular press review TV host), a counselor of Mugur Isarescu (governor of the National Bank of Romania), representatives of financial companies all came forth to prophetize. Some of them said the increase would continue and once the exchange rate would be up it would stay up.
Now, it's my turn to bring my own prophecy out into the world.
I think the exchange rate is what the National Bank wants it to be. They have enough foreign currency reserves to allow them to play with the indexes. We all know there are convergence criteria to be respected for Romania to be able to switch to the euro... at some point. Do all these experts think the national bank is going to let the exchange rate slide out of the convergenge criteria and out of control?
I think what is really going on is that the National Bank saw what happened around Christmas last year and decided to make preparations. The increase in exchange rate is just a countermeasure put in place, in advance, to counteract another, otherwise inevitable, fall of the euro caused by the enormous amount of Christmas spending Romania goes through every year. Without this increase I believe Romania would slip out of the convergence criteria in the opposite direction.
And so I have foretold.
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