This week Romania has a new government as a result of a no-confidence vote in the Parliament which the incumbent government did not pass.
What did markets think of the change? The exchange rate has depreciated moving above the EURRON 4.4 threshold. However, this market is not free and natural market movements that incorporate new information are controlled by the central bank.
But there is one more market that had the same view about the change (at least until now): the fixed income market. The yield curve which has been falling consistently until the no-confidence vote (see here) has jumped right after the fall of the incumbent government and continued to move upwards even after the new government was in place. The move is not significant yet, but the direction shows the apprehension of the market with the new government and its policies, so far.
Of course, part of the jump could be the result of the central bank not cutting the key policy rate from 5.25% to 5% as the market expected before the fall of the government. However, even the NBR justified its decision as being influenced by the political risks.