Romanian financial markets reacted positively on May 19 to the outcome of the country’s presidential election, reflecting renewed investor confidence in political stability and expectations of fiscal normalisation.

The market movements came in response to the election of reformist, pro-EU candidate Nicușor Dan, who defeated far-right rival George Simion in the May 18 runoff.

The Romanian leu appreciated by 1.4%, 10-year government bond yields dropped by 60 basis points to 7.41%/7.16%, and the Bucharest Stock Exchange main indices surged by more than 4% compared to the close on the Friday before the vote.

The yield curve for government debt, which had been inverted amid pre-election uncertainty, shifted downward as shorter-term yields declined by as much as 80–90 basis points.

“We expect that Dan's victory in Romania will likely bring a relaxation of the markets, with some appreciation pressure on the currency and falling long-term yields,” economists Katarzyna Rzentarzewska and Juraj Kotian of Erste Group stated in a note cited by Profit.ro. “Dan's victory should strengthen the belief that the Romanian economy will stabilise.”

ING Bank echoed the sentiment, noting that the leu strengthened to below RON5.050 to the euro for the first time since the first round of the elections. “The result of the second round of the presidential elections brought reassurance to financial markets,” said Frantisek Taborsky, ING Bank economist for EMEA currency strategy.

Despite the optimism, analysts warned that Romania’s fiscal challenges remain acute. The country ended 2024 with a budget deficit of 9.3% of GDP and is expected to reduce this to 7% in 2025. However, budget execution in the first four months has raised concerns.

“Romania must establish a new, stable and comfortable majority government as soon as possible to guarantee the implementation of unpopular fiscal consolidation measures,” said Anca Maria Negrescu, senior economist at UniCredit Romania.

President-elect Dan is expected to nominate a prime minister following consultations. He has expressed a preference for interim Liberal Party leader Ilie Bolojan, though securing parliamentary support remains uncertain.

Erste analysts stressed that further stabilisation will depend on the formation of a fully functional government and the presentation of a credible fiscal plan. The European Commission is set to assess Romania’s fiscal position in early June.

“Looking ahead, the market will want to see more action from the government on the fiscal side to avoid negative views from rating agencies,” added Taborsky. “The currency should be the biggest beneficiary of the end of political uncertainty.”