The last trading week of February saw a 10.5% decrease of the Bucharest Stock Exchange’s (BVB’s) main index, BET, the steepest decline since December 2018 when investors were knocked out by a government decree that introduced the so-called “greed tax”, data compiled by Ziarul Financiar daily show. The Romanian stock market fell during the week from about 10,100 points to about 9,100 points, according to the BVB.

Friday was the seventh trading day in a row during which the Romanian stock market declined as a result of the panic generated by the spread of the coronavirus (Covid-19) in all major markets, according to ZF calculations.

On Friday, there were aggressive sales of companies such as Romania’s largest oil and gas producer OMV Petrom, whose shares collapsed by 7.7%, the steepest decline for this company since December 2018. Investors also sold significant amounts of shares in Banca Transilvania, whose share price dropped by 5%, nuclear energy company Nuclearelectrica (-6.3%) and petroleum products transport company Conpet (-5.7%), BVB data shows.

The turnover (shares only) on the main segment of the stock exchange was RON145mn (€30mn) on Friday, three times higher than the average daily turnover.

Romania’s currency also kept sliding versus the euro, this time partly on fundamentals. The national currency, the leu (RON), reached a new low versus the European currency on February 28.

The mid-day official exchange rate announced by the National Bank of Romania (BNR) hit RON4.813 to the euro, compared to the previous low of RON4.808 to the euro reached on Tuesday.

Romania’s currency has thus returned to a trend of depreciation in recent days due to political instability and fears on the global financial markets caused by the coronavirus.

However, the fundamental cause of the depreciation of the leu is the widening of the current account deficit that is approaching the warning level of 5% of GDP and is fuelled by the budget deficit that shows no signs of being adjusted, according to the latest poll conducted by the CFA Association among its members in late February. The European Commission (EC) will ask the European Council to open the excessive deficit procedure (EDP) against Romania, EC Executive Vice President Valdis Dombrovskis said on February 26.