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Tuesday, December 4, 2007

Romania: Leu Down Producer Prices UP

Romania's leu fell the most in almost two weeks against the euro today, apparently on investor concern inflation is making exports uncompetitive and the current account deficit unsustainable growth. The leu dropped today for a second day after INSEE (the Bucharest-based statistics office) said producer-price inflation accelerated in October by the most in six months. The cost of goods produced in Romanian factories and mines rose at an annual 8.2 percent rate in October, compared with 7 percent in September, according to the INSSE data. Month on month producer prices rose by 1.6 percent, up from 1.2 percent in September.

The rate of Romania's economy expansion slowed 5.7 percent in the third quarter, the second slowest pace since the end of 2005, while inflation picked up to 6.8 percent in October, the strongest rate since April 2006. The leu fell by as much as 0.9 percent today, which was the most since Nov. 22, to 3.5353 per euro at 2:30 p.m. in Bucharest, down from 3.5026 late yesterday.

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