JPMorgan Favors Euro Against Romanian Leu in FX Market
LONDON (Reuters) - Wall Street bank JPMorgan said on Tuesday it was going long on the euro versus the Romanian leu in FX spot markets, with the country's intervention policy seemingly shifting after Sunday's first-round presidential election. .
The bank said that the leu's movements following the win of George Simion, the country's hard-right eurosceptic opposition leader, in the first round of Romania's presidential election re-run on Sunday raised the chances of a devaluation.
In a recent note, the bank had sketched out scenarios including a 3-5% devaluation and a 15-20% devaluation.
"We would argue for a 50/50 probabilities between the two devaluation scenarios but the developments on the ground will matter hugely as well," JPMorgan's Anezka Christovova said in a note to clients.
However, Christovova said that a different second round outcome of the presidential elections or a change in Simion's rhetoric would alter these probabilities.
"We...go long EURRON spot (assuming daily rolling of funding) aiming initially for a 5% total move from pre-intervention levels."
(Reporting by Karin Strohecker, editing by Libby George)
