What Is RON (Romanian New Leu)?
RON is the abbreviation for the Romanian new leu, the currency for Romania. A single Romanian leu is the primary denomination for most prices in Romania and is often represented on the exchange as the plural with the symbol lei.
- RON is the three-letter code for the Romanian currency.
- The base denomination is 1 Leu (plural Lei).
- The N in RON is for New Leu which replaced old Leu in 2005.
- The currency is scheduled to be replaced by the euro in 2024 but is not currently pegged to the euro or any other currency.
Understanding RON (Romanian New Leu)
Though euros and U.S. dollars are often used and exchanged in Bucharest, the capital city, Romanian lei (plural form of leu pronounced lay) are used as a dominant standard throughout the country.
The new leu is the fourth leu in a series of currencies brought about through revaluations since 1867. The new leu replaced the old Romanian leu, currency symbol ROL, in July 2005 at a rate of 10,000 old leu to one new leu. The current version was used alongside the previous leu from March 2005 until December 2006 during the conversion period. Throughout the leu's history, it has been pegged to the currencies of other nations, such as the German reichsmark, the American dollar, and the Russian ruble. Though Romania is currently scheduled to adopt the euro as its primary currency in 2024, the leu is not currently pegged to the euro.
Romanian new lei come in coinage denominations of 1 ban, followed by 5, 10 and 50 bani. Banknotes for new lei go from 1 leu and up to 5, 10, 50, 100, 200 and 500 lei. The smallest bills in value have the smallest size in both width and length. The largest bill has the largest size. The bills are actually a polymer construction instead of paper, making security features such as the transparent window and multicolored bands easier to produce.
The front of each banknote depicts an important figure from Romanian history alongside a plant. As an example, the 500 lei note shows poet Mihai Eminescu and lime leaves with flowers. The reverse of the bill depicts the Iaşi University Library, a building important to Romania. The Romanian new leu continues to recover from the global economic recession of 2008 and the subsequent economic downturn in Europe.
RON and the Romanian Economy
Romania joined the European Union in 2007, yet it has been unable to meet the financial standards for becoming part of the eurozone. Romania could not meet the target for becoming part of the Exchange Rate Mechanism II by 2016. Therefore, it had to delay transitioning to the euro with the goal of adoption in 2024. Romania remains one of the European Union's poorest countries even though it has enacted monetary and financial reforms in its bid to move to the euro.
After the global economic downturn, Romania needed a $26 billion emergency aid package from the International Monetary Fund (IMF) and Europe. Despite the assistance, the country's gross domestic product (GDP) fell backward until 2011. After instituting reforms, Romania's economic growth returned due to industrial exports and bountiful agricultural harvests. From 2016 to 2017, the budget deficit shrank, and for the first time since the end of communism in 1989, Romania went through a time of deflation instead of inflation. The deflationary period allowed the National Bank of Romania to loosen monetary policy.