By: Iulian Ernst
The real effective exchange rate (REER) of the leu is still too strong in relation to the fundamentals of the local economy, and Romania needs a depreciation of the real effective exchange rate (nominal exchange rate adjusted for differential inflation and weighted over a basket of currencies) to correct the external imbalance, according to an analysis carried out by Goldman Sachs economists Basak Edizgil, Alessa Abraham and Kevin Daly.