BUCHAREST (Reuters) - Romanian Prime Minister Mihai Tudose criticised the central bank late on Thursday for not intervening to stop the leu currency from weakening and suggested commercial banks may have contributed.
The bank’s spokesman said the bank’s board will likely request a meeting with the prime minister to clarify his position.
The leu EURRON= hit a record low of 4.6585 against the euro this week, driven by concerns over budget spending and a ballooning trade deficit. On Friday, it was flat against the euro at 4.6520.
The central bank this month signalled that monetary policy will focus on keeping market interest rates near its benchmark rate, and that it would be more flexible on the currency exchange.
“The central bank can and must intervene. It hasn’t done so,” Tudose told private television station Antena3, adding that the central bank cut minimum reserve requirements, freeing up euros into the market, which commercial banks then externalized.
“We are talking about the separation of powers. We will have to have a very grounded and serious discussion with the central bank about what is going on and what its purpose should be, without the government going over the bank.”
“Maybe this is also the revenge of a part of the banking system, for making them pay taxes.”
It is not the first time the prime minister has verbally attacked central bank monetary policy decisions, which are independent from the cabinet. In September, Tudose criticised it for failing to curb a rise in interbank interest rates.
“In my opinion, the bank’s board will meet to decide on a joint response and will likely want a clarification meeting with the prime minister,” central bank spokesman Dan Suciu said.
The ruling Social Democrats have gone backwards and forwards on their tax intentions this year, often announcing measures without assessing their impact and then backing off, stirring uncertainty among investors and weighing on assets.
The government has already raised public sector wages and pensions and plans further hikes as well as tax cuts for 2018, all of which has boosted import-reliant consumption.
Reporting by Luiza Ilie; editing by Ralph Boulton