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Romania Currency
In 1989 the official unit of currency, the leu (pl.,
lei),
which consists of 100 bani, was valued at about 14.5 lei
per US$1.
In 1954 the government set the gold parity of the leu at
148.1
milligrams (where it remained as of 1989) and on this
basis
determined the official rate of conversion to Western
currencies.
But because Romania's centrally planned economy set prices
independently of international economic forces, the
official
exchange rate quickly became divorced from reality. Thus,
like the
currencies of other Comecon states, the leu became a
so-called
"soft" currency--one that can not be used outside the
country of
issue.
In addition to being a soft currency, the leu had no
unitary
exchange rate consistently applied for all transactions.
Bucharest
used a bewildering range of conversion rates in order to
pursue
various economic objectives, such as fostering exports and
tourism.
Although the International Monetary Fund
(IMF--see Glossary),
which had loaned hundreds of millions of dollars to Romania in
the 1970s,
insisted that the policy of multiple exchange rates be
discontinued, at least thirteen different rates were still
in use
in 1982--one rate for imports and twelve for export
transactions.
According to
World Bank (see Glossary)
analysts in the
late 1980s,
however, it appeared that a unified commercial exchange
rate for
the leu was Bucharest's goal. A separate, bonus exchange
rate
continued to be offered to tourists. Both the commercial
and
noncommercial rates tended to remain in effect for long
periods
without the daily fluctuations that characterize hard
currencies.
The state retained a monopoly on foreign exchange.
Private
citizens could not hold foreign currencies or securities
or have
bank balances abroad without official permission, nor
could they
import or export Romanian banknotes. They were forbidden
to own or
trade in gold, to export jewelry or diamonds, and to
engage in
foreign merchandise trade. All proceeds earned by foreign
trade
organizations were surrendered to the Foreign Trade Bank.
All hard
currency earnings were consolidated in the Hard Currency
Fund, set
up in 1988 to prevent foreign trade organizations,
ministries, and
enterprises from making unofficial hard currency
transactions.
On the black market, which thrived throughout the
postwar era,
especially during the austere 1980s, barter was more
effective than
the official currency in procuring the most highly sought
goods and
services. Kent brand cigarettes emerged as the most
universally
accepted unofficial medium of exchange, a status they
could attain
because of the state's prohibition against private
ownership of
hard currencies. The street value of one carton of Kents
in 1988
was approximately US$100. In the countryside, agricultural
products
became the de facto currency.
Data as of July 1989
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