East European Currencies: Romanian Leu Declines Against Euro

By Yon Pulkrabek

Aug. 11 (Bloomberg) -- The Romanian leu fell against the euro as inflation accelerated less than expected by economists and the trade gap widened. The Czech koruna had its biggest gain in almost a year.

Consumer prices rose 9 percent in July, compared with the 9.3 percent median estimate expected in a Bloomberg News survey of eight economists. Inflation was 8.6 percent in June. The trade gap widened to 2 billion euros in June, from 1.79 billion euros in the same month a year earlier.

The leu dropped as much as a 0.8 percent to 3.5574 per euro, its lowest level in two weeks, and traded at 3.5575 at 10:29 a.m. in Bucharest.

``The Romanian consumer price index has surprised on the downside this morning, helped by a sharp drop in the contribution from food prices, which will be read as a negative for the leu,'' Lucy Bethell, an emerging-markets currency strategist at Royal Bank of Scotland Plc wrote in a client note. ``Fresh Romanian trade data shows the trade deficit as big a headwind for the leu as ever.''

Elsewhere, the Czech koruna had its biggest one-day gain in almost a year, rising 1.2 percent, the most since Aug. 6, 2007. The koruna gained to 24.060, compared with 24.357 late last week.

The koruna is the worst performer against the euro over the past month of the 26 emerging-market currencies tracked by Bloomberg, dropping 2.6 percent.

The Turkish lira snapped a four-day losing streak rising 0.7 percent to 1.1811 per dollar, while the Polish zloty rose for the first time in five days, gaining 0.5 percent to 3.2583.

The Hungarian forint advanced for the first time in six days to 235.94 per euro from 236.44 late on Aug. 8. The Slovak koruna was little changed at 30.364 against the euro.

To contact the reporter on this story: Yon Pulkrabek in Prague at ypulkrabek@bloomberg.net