The leu set record lows on Monday despite expectations for robust output data from Romania, depressed by uncertainty over a likely government spending spree and continuing fraud investigations in Bucharest. Anti-corruption prosecutors opened a probe into the leader of the ruling Social Democrat Party, Liviu Dragnea, on suspicion of forming a "criminal group" to siphon off cash from state projects.
A controversial tax overhaul plan has also weighed on Romanian asset prices. The leftists' fiscal policy has been loose, including steep wage hikes which boosted Romania's inflation to a four-year high of 2.6 percent by October and led to an upwards revision in the central bank's (NBR) inflation forecast last week. It also signalled a shift in its monetary policy focus to keeping market interest rates near its benchmark rate, and said that it would be more flexible on the exchange rate. The leu set record lows and slipped further on Monday to 4.657. At 1425 GMT, it traded at 4.6553, weaker by 0.15 percent from Friday's close.
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