Romania
Our EM strategists see Romania drifting toward a currency crisis as twin deficits, high inflation, and an overvalued leu strain macro stability. Political uncertainty is making the adjustment harder by reducing the odds of credible fiscal tightening and…
In Romania, large fiscal and current account deficits, high inflation, negative real rates, an overvalued exchange rate, and deteriorating growth point to budding currency devaluation. Investors should short the Romanian currency versus the euro and underweight Romanian local bonds, equities, and sovereign credit.