Bearish RON/EUR In The Short-Term

February 2008 | Currency Forecast

Hitherto, we have highlighted the stability offered to the Romanian banking system by significant capital injections from Western banking groups. This has prevented a classic asymmetrical banking system crisis over recent years. However, the current US subprime credit crunch and problems in the G7 area offers a new transmission methods for G7 economic problems to spill-over into CEE. Although we see CEE operations as a core part of Western banking groups long-term growth strategies, if credit becomes even scarcer, banks may be forced to reduce their lending to local subsidiaries and a much tougher local credit and consumer-environment would ensue.

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