The high share of products with prices displayed in euros makesany exchange rate shock reflect instantly in inflation, so that theNBR is forced to keep RON rates up, even though the economy needscheap funding.
The preference of many companies - from mobile telephony to cardealers or housing developers, to display prices in euros, as wellas the practice of bankers to sell loans in foreign currencyaggressively have turned the exchange rate into an "obsession" formost Romanians.
Because of the high "euroisation" of the economy - which means thatconsumer prices react to exchange rate shocks instantly, theNational Bank is rendered unable to use its monetary policy now andsupport the economy that cannot seem to find its way out ofrecession - analysts feel. With prices for the most important goods- homes and cars, displayed in euros, people have been driven toborrow in euros, which left them exposed to exchange ratefluctuations.
NBR cannot feed cash into the economy for fear it might generate adepreciation of the exchange rate, which will hurt the stability ofthe banking system, inclusively. Therefore the NBR has been forcedto constantly keep an eye on the forex market over the years, eventhough theoretically the RON is the only circulating currency inRomania.
Whereas in Hungary mobile phone companies Vodafone and Orangedisplay call plan prices in forints, in Bucharest the tariffs arenot shown in RON but in euros. The same goes for local carmakerDacia, which shows prices in zlotys and forints on its websites inPoland and Hungary, and in euros in Romania. The list may alsoinclude hotels, travel agencies and airlines, which apply similarpolicies, therefore practically defying the existence of a nationalcurrency.
Even the local law is lenient, leaving those involved in trade theoption to display prices in foreign currency, while regulations inHungary require prices be displayed in euros. The same goes forPoland, where they are bound by the law to show prices inzlotys.
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