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Tuesday, September 4, 2007

Romanian Leu Decline

Romania's leu fell against the euro for the sixth consecutive day this morning, trading at its lowest level in four months, following a report showing economic growth is slowing and as rising concern over the possibility of a US recession and a global credit crunch prompts investors to sell higher-risk, emerging-market assets. Growth in the preliminary reading on Q2 2007 GDP slipped to 5.6 percent, from 6 percent in the first three months, the Romanian National Statistics Institute said earlier today. The leu has now dropped 3.8 percent in the past month against the euro. Against the euro, the leu dropped today to 3.2996, its lowest since May 9, and traded at 3.2963 by 11:31 a.m. in Bucharest, from 3.2700 late yesterday. The three month Euro-leu cross chart below should give the idea. Note how the leu has been falling in value since late June, but also note the acceleration in the decline since the end of August.

Also, for reasons of comparison here is a one year leu-Dollar cross chart. The dollar has of course itself been falling in value against the euro.

Meantime the Slovak koruna fell 0.2 percent to 33.781 versus the euro. Slovakia's statistics office said today the average wage rose 5.9 percent to 19,598 koruna in the second quarter, from 18,511 in the previous three months. Slovak economic expansion accelerated to 9.4 percent in the same period from 9 percent in Q1, the Statistical Office said in its final GDP report for the quarter today.

The Polish zloty also declined 0.2 percent to 3.8267 per euro as investors awaited a parliamentary vote on dissolving the assembly scheduled for Sept. 7 that may pave the way for early elections. To pass, the motion needs a two-thirds majority or support from at least two opposition parties, including the biggest, the Citizens' Platform.

The ruling Law and Justice party overtook the Platform in the latest opinion poll carried out by the PBS pollster and published today in Gazeta Wyborcza.

Turkey's lira fell 0.8 percent to 1.3090 per dollar and the Hungarian forint dropped 0.5 percent to 256.11 per euro.

The Czech koruna, used as a funding currency for carry trades, advanced to 27.655 per euro, from 27.669 late yesterday. The Czech statistics office said the country had a trade deficit of 728 million koruna in July, thus posting the first gap this year.

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