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Romania’s current account risks continue to mount

Romania’s current account deficit, which is among the largest in the EM world, has continued to widen this year and now exceeds 9% of GDP. It is reassuring that much of the deficit is currently being financed by relatively stable forms of capital inflows. But the leu remains vulnerable to a decline in investor risk appetite and, alongside high inflation, it is a reason to think interest rates will stay high for some time.

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