During the last 3 months the majority of emergent economies around the world crashed. Have you thought why Romania was not affected at all?


During the beginning of summer, the US Federal Reserve was expected to gradually decrease its “ultra – easy” monetary policy of investing 85 billion dollars per month in bonds. As a result to this expectation, in July we witnessed the economies of India, Turkey, Brazil and many other emergent countries becoming abandoned by international investors. National currencies dropped by 15 – 25% in few days’ time, governments were desperate trying to find solutions.

During summer we read tens of analyses by international media regarding the new world that is rising once the FED would buy less or no bonds each month, in a policy with a bill of… 3,6 billion Dollars so far (!). European economies were expected to pick up, the whole world was about to change due to this decision. The “Butterfly Effect” in the world economy is here…

A drama… postponed

Finally, last week the FED surprised the experts and did not modify its policy. It continues buying bonds worth 85 billion dollars per month. This automatically changed the short-term scenario and the shrinking economies bounced back, rising again in investors’ priority list. This does not mean that the expected… drama will not occur. It seems that it is just postponed for some months later (but no one can be sure 100%).

Romanians left in their peace

While so many economies and currencies were put under question mark, the Romanian one was practically left out of the game. Ron currency decreased from 4,36 Ron / 1 Euro to almost 4,47 Ron / 1 Euro, something that did not really worry many people in the country. Of course the journalists started predicting the end of the world etc., but still everything was kept under control and there is no sign that this situation will change.

Romania was not affected.  Have you thought why?

Romania also benefited from this aggressive “ultra – easy” FED approach. It is not by coincidence that the Romanian bonds were sold at record low yields during 2013. The main reason was the existing surplus of capital, searching for opportunities worldwide, using the FED’s policy to earn money, the well-known “carry trade”. (Carry trade: the process of borrowing money from one economy and invest it in another one with higher interest, usually an emergent one. Its reverse mode is when the investor redraws from the emergent country back to the more advanced economies, leaving behind problems).

Romania benefited from this. Why didn’t it also “pay the bill” when the tornado was knocking the doors of all emergent countries? Why is it normal for Romanians to enjoy their vacation without stress, while many other populations faced the consequences of reverse “carry trade”?

Mugur Isarescu: The most important factor of stability in this country

The reasons that Romania was protected from the huge summer problems were mainly two:

  1. From macro-economic point of view, the country looks healthy to the eyes of foreign analysts. Except the Foreign Direct Investments that suffer, Romania benefits from an impressive growth rate, an economy under control, rising exports and decreasing trade deficit (this is not what an average citizen perceives in his own pocket, but this is an international problem and a different discussion)
  2. The most important of all: The presence of Mr. Mugur Isarescu in the helm of BNR. Apart from his know how in handling crises and keeping the country safe from international problems, himself and his team are known as “not easy to play with”. The reserves of BNR are very high for the size of Romanian economy, allowing him to interfere and protect the country’s currency and economic direction each time a threat is coming close.

Mr. Isarescu and his team are usually the buffer that absorbs the waves of worries created by investors or due to the political problems the country faces from time to time. Many experts are convinced that “shouldn’t Mr. Isarescu not been the Governor of BNR, any decline of Ron during the last 5 years would be multiplied with 3. If it fell by 5%, it would have fallen by 15% without Mr. Isarescu present etc.”.

Kind suggestion: Let BNR out of the political disputes, Rosia Montana stories etc. BNR is the backbone of Romanian economy and it is better to stay like this

Shallow people, completely irrelevant to what “economy” really means, can easily attack the Governor of BNR for any kind of reason, including Rosia Montana (!) When the currency is protected, they are quiet. If it drops by 2%, they are asking for explanations (as if they would understand…). Of course, they refuse to admit that without him the drop would be 6% of more.

Right now Romania needs peace, stability and hard work. As we will not have political peace until December 2014 presidential elections and we don’t see people dying on the streets, exhausted from hard work, let us protect the stability that BNR is offering to the country. Mr. Isarescu and his team, BNR in total, is the backbone of Romanian economy. Not only due to their key role in balancing the banking system, but also because they are the main factor of stability in the country. The ones you know that will hold the steer no matter what happens around them.

I know, Romanians, Greeks, love criticizing / demolishing the ones who work for their protection. But let us make an exception with BNR. Mr. Isarescu and his team should be left out of political and other games, they have more important tasks to accomplish.

Isn’t it better after all to fight for Rosia Montana and the stray dogs (feeling sure for the basics, such as the stability of currency), instead of desperately watching the news and check every hour how much the Ron dropped against Euro and Dollar?

What is your opinion?


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