iBanFirst has released its Currency Outlook for Q4 2024, focusing on the Romanian Leu (RON) and the EUR/USD currency pair. The report highlights that the normalization of monetary policy in both the European Union and the United States will significantly influence foreign exchange markets. Analysts predict that the upcoming Romanian and US presidential elections are expected to have minimal long-term effects on currency stability [8e5aed42].
The forecast indicates increased volatility for RON crosses, with the USD/RON rate potentially triggering a technical rebound near 4.44. Additionally, the EUR/RON is projected to have short-term upward potential, targeting 5.00. For the EUR/USD pair, fluctuations are expected to range between 1.07 and 1.12, driven by the US economic outperformance and stock market performance, which will support a strong dollar [8e5aed42].
In the broader context, iBanFirst previously projected the Romanian economy to grow by 2.7 percent in 2024, supported by public investment and private consumption. However, concerns remain about the elevated deficit of 5.6 percent of GDP, which the next government will need to address [f223f50b].
Inflation in Romania is expected to stabilize around 5 percent, with the central bank's target of 4 percent not anticipated to be reached until 2026. This situation reduces the likelihood of interest rate cuts in the near future, with the first expected cut not occurring until May 2024 [f223f50b].
The exchange rates for the EUR/RON are expected to remain stable between 4.99 and 5.02 throughout the year, while the USD/RON is projected to rise due to geopolitical factors and the resilience of the US economy. Currently, the USD/RON rate is at 4.60, with an expected price target of 4.80 [f223f50b].
Overall, iBanFirst remains optimistic about the Romanian economy, projecting an average GDP growth of 4 percent per year in the coming decade, despite the challenges posed by inflation and fiscal deficits [f223f50b].