* Government trying to suspend, impeach president
* President says govt seeks control of judiciary
* Political row pressures currency, debt costs
Romania's president accused the government on Thursday of using an attempt to impeach him as a way of grabbing control of the judiciary and other state institutions.
The leftist Social-Liberal Union (USL) government is set to use its parliamentary majority to vote on Friday to suspend right winger Traian Basescu. A referendum would then be held on his impeachment within a month.
The impeachment threat is part of a wider political clash that has paralysed lawmaking and raised doubts over Romania's ability to keep to a 5 billion euro International Monetary Fund-led aid deal - hurting the currency and increasing debt costs.
Basescu told parliament: "The major objective of this suspension is to put the justice system and state institutions under the control of parties in the USL."
In power since May after the previous, centre-right government collapsed, the USL, led by Romania's third prime minister in four months, Victor Ponta, is favourite to win an election late this year,
It passed a law to make it easier to impeach Basescu, whose position is ceremonial but who influenced the previous government's austerity policies. In the impeachment request, USL lawmakers said the president broke the constitution and pressured judges.
The new law, still pending judgment in the constitutional court, would make it possible for a simple majority of voters in to impeach a president in a referendum, rather than requiring a majority of the entire electorate.
That reverses previous legislation by the Democrat-Liberal Party (PDL), which has close links to the president and is now in opposition. The PDL had switched the referendum rule to a majority of the electorate after a previous attempt to unseat Basescu in 2007.
Basescu would probably lose the referendum and his post if the new law is enforced, but survive if the court rejects it.
POWER GRAB "SERIOUS"
Ponta did not attend the parliamentary debate on Thursday, seeking instead to reassure investors.
"I am not in parliament for a political debate but I am here with you because I feel that in this type of political battle it is essential to maintain economic balance," Ponta told a meeting of investors, according to news agency Agerpres.
The USL has come under severe pressure itself. Ponta faces calls to resign over plagiarism charges and the government had to back down from an attempt to replace judges on the constitutional court, amid international criticism.
The president of the Venice Commission, the Council of Europe's advisory body on constitutional matters, issued a statement expressing "deep concern (at) various attempts to exercise pressure on the Constitutional Court of Romania and to undermine its independence".
The leu fell 0.2 percent on Thursday, close to a record low of 4.49 per euro, and dealers said the central bank could intervene to support the currency and that borrowing costs would probably rise at a tender later in the day.
"The notoriously turbulent Romanian politics tend to be ignored as a background noise, but this time the power grab by the ruling USL is serious enough to provide for a more lasting weakness of EUR/RON," ING said in a note.