Hard-right eurosceptic George Simion decisively swept the ballot, with some 41% of votes, and will face Bucharest mayor, Nicusor Dan, an independent centrist, in a May 18 run-off.
A ruling coalition candidate, Crin Antonescu, came third.
A Simion victory could isolate Romania, erode private investment and destabilise Nato’s eastern flank, where Bucharest plays a key role in providing logistical support to Ukraine as it fights a three-year-old Russian invasion, political observers say.
It would also expand a cohort of eurosceptic leaders in the European Union that already includes the Hungarian and Slovak prime ministers at a time when Europe is struggling to formulate its response to US President Donald Trump.
Several members of the ruling Liberal and Social Democrat (PSD) parties said the government was no longer viable.
“It is very clear that there must be a government without Marcel Ciolacu because he no longer has legitimacy,” Liberal senior executive and lawmaker Robert Sighiartau told reporters outside party headquarters in Bucharest.
Coalition officials are expected to meet later today.
Ciolacu rejected the idea of resigning when asked by reporters last night.
“The Social Democrats and the Liberals are in a very tight spot,” Cristian Pirvulescu, a political scientist, said.
“Even if this coalition continues, it will not do so for long, and the risk of fractures within both parties is very high.”
The vote underscores simmering anger among vast parts of the Romanian electorate over high living costs and worries over security.
Yesterday’s vote came five months after a first attempt to hold the election was cancelled because of alleged Russian interference in favour of far-right frontrunner Calin Georgescu, since banned from standing again.
Simion has said he could appoint Georgescu prime minister should he win.
Romanian international dollar bonds tumbled, with the longest maturities taking the biggest hits.
The 2053 maturity fell more than three cents to be last bid at 91.84 cents on the dollar, while the 2051 lost more than two cents.
Local bonds also fell in price, with the 10-year local note yield jumping to 8.0%, the highest in more than three months.
“In our view, both Simion and Dan would bring some political instability as neither is linked to the current majority in parliament,” JPMorgan analysts said in a note today.
Political risk has increased “considerably”, they added.
“While Simion can be pragmatic, if the Georgescu plan is implemented, then markets are unlikely to react positively,” the note said.