Pensioners turn to foreign currency to protect savings against inflation

Recent data from the National Bank of Romania (BNR) reveals a worrying trend for pensioners and those on fixed incomes: although the population's total savings have grown in nominal terms, their real purchasing power has fallen significantly due to inflation.

The hardest-hit category is RON-denominated savings, which have lost 7.6% of their real value over the past year. For pensioners who keep their savings in the national currency, this means that the money they have set aside can no longer buy the same goods and services as it could a year ago.

The shift to foreign currency — a protective strategy

By contrast, Romanians who have chosen to hold their savings in foreign currency have benefited from significant protection against monetary erosion. Euro and dollar deposits recorded a spectacular 16% increase in RON terms, offering a viable alternative for preserving purchasing power.

The population holds more than 257 billion RON in bank accounts, yet the nominal growth of just 3.9% falls well short of the inflation rate. This situation particularly affects pensioners, who typically hold more conservative savings in the national currency.

The impact on older adults

For elderly people, this economic reality presents particular challenges. Many pensioners are unfamiliar with foreign currency financial instruments and may not fully understand the risks and benefits of such a savings strategy.

At the same time, pensioners' fixed incomes — pensions that do not adjust in real time with inflation — make them more vulnerable to the erosion of purchasing power. Their savings, most of which are held in RON, lose value whilst the costs of medicines, medical care, and other essentials continue to rise.

The trend towards foreign currency reflects a defensive behaviour among the population, as people seek to protect their life savings in the face of monetary instability. For older adults, this economic lesson underlines the importance of diversifying savings and understanding the impact of inflation on fixed incomes.