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