News Column

Socol: Romania has strong mechanisms to counteract effects of storm on international financial markets

February 3, 2014

Agerpres, Bucharest, Romania

Feb. 03 -- BUCHAREST -- Romania has strong immunization mechanisms to some shocks caused by the limitation of the quantitative relaxing process in the U.S., the overflow of private capital flux, depreciation episodes, shocks on non-performing loans and medium or high financial instability, considers Cristian Socol , adviser to Prime Minister Victor Ponta . ' Romania has low budget deficits and current account, a buffer of over 5 billion euros and an international reserve (foreign currencies plus gold) of 48.2 billion dollars (1.8 times higher than the short-term foreign debt and 1 6 times higher than the gross demand of foreign financing). Furthermore, the average loan maturities have increased, which means greater solidity to international financial risks,' the quoted source explained. According to him, the gradual/sudden limitation of the quantitative relaxation by the U.S. Federal Reserve (FED) can cause disorder on the financial markets of emerging countries in 2014, and states such as Turkey , Chile , Indonesia , India , South Africa , Hungary , Brazil and Poland could be the most affected by a massive limitation of capitals, caused by capping the injection of money by the FED. ' Hungary has entered this category, too. Turkey , Poland , Hungary , South Africa , Brazil and other emerging countries have been recorded for a few days strong depreciation episodes of their currencies. The financial systems of these countries are put to the test, and they are forced to increase interest rate and renounce part of the economic growth in order to defend their own currencies,' says the prime minister's adviser. The FED announced on Thursday it intends to reduce the pace of purchasing bonds for the second consecutive month, amid low unemployment rate and the solid trend of the U.S. economy, the BBC reports. The bond purchases conducted by the FED are divided as follows: 35 billion dollars for Treasury bills and 30 billion dollars for real estate collateral securities. After Thursday's monetary policy session, the FED announced that it would cut by some 10 billion dollars a month the bond-purchasing programme aimed at boosting economic activity and at maintaining low interest rates. ___ (c)2014 Agerpres, Bucharest, Romania Visit Agerpres, Bucharest, Romania at www1.agerpres.ro/english Distributed by MCT Information Services


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Source: Agerpres (Romania)


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