East European Currencies: Romanian Leu Rises as Growth Quickens

By Yon Pulkrabek

Sept. 1 (Bloomberg) -- Romania's leu advanced against the euro and dollar after a report showed the country's economy grew faster than expected in the second quarter. The Hungarian forint fell for the sixth time in seven days.

The leu climbed for a fourth day versus the euro after the Bucharest-based National Statistics Institute said gross domestic product expanded 9.3 percent, from 8.2 percent in the first quarter. That compared with a median estimate of 8.6 percent in a Bloomberg News survey of nine economists.

``Accelerating GDP should help the leu strengthen versus the euro in the short term,'' Nicolaie Alexandru-Chidesciuc, an analyst at ING Group in Bucharest, wrote in a client note after the release of the data. ``We look for leu appreciation versus the euro before the Romanian central bank's rate-setting meeting on Sept. 25.''

The leu advanced to 3.5162 per euro by 11:32 a.m. in Bucharest, from 3.5324 on Aug. 29, and gained 0.2 percent to 2.4026 per dollar.

Romanian central bank Governor Mugur Isarescu last month predicted gross domestic product would increase 9 percent in 2008 and warned the ``overheating'' economy is stoking inflation and deepening the current-account deficit.

Policy makers raised the nation's main interest rate to 10.25 percent in July, the highest level in the European Union, as inflation accelerated to 9 percent, the fastest pace in three years.

In other trading, the forint dropped to 238.06 per euro, from 236.84 on Aug. 29, when it gained by the most in two weeks.

Poland's zloty declined to 3.3360 per euro, from 3.3323 at the end of last week, and the Czech koruna was steady at 24.795 against the European Union's common currency.

The Slovak koruna and Turkish lira were little changed at 30.325 per euro and 1.1838 per dollar, respectively.

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