"I decided to make a nomination in order to move things ahead and to avoid a political logjam", Iohannis said in a statement, after holding a round of consultations with political parties.
Florin Citu, 47, has been a liberal senator since 2016 and is currently serving as interim Finance Minister.
According to analysts, the move by Iohannis seems to be part of Iohannis' plan to generate snap elections, at a time when the PNL is riding high in the polls
"I think is a joke (...) The president chose to prolong the crisis", Marcel Ciolacu, chief of the Social Democratic Party (PSD), told Digi24 television upon hearing the news.
"Nothing recommends him (Florin Citu) for this job", Ciolacu continued, adding that PSD won't vote for the new government.
The Romanian president can only dissolve parliament, and order early elections, after two failed attempts to install a new executive within 60 days.
The PSD won the last elections in 2016 but after losing support following mass protests over corruption was pushed out of government in a no-confidence vote last year.
Still, the social democrats hold the most seats in Romania's fragmented Parliament, 202 from a total of 465. The PNL only has 109 MPs.
The PSD, has advanced the idea of a government of experts or one of national unity, an option which Iohannis doesn't favour.
The ongoing political crisis was sparked on February 5, when the minority government led by Ludovic Orban, chief of PNL, collapsed on February 5, following a parliamentary no-confidence vote after just three months in office.
A day later, Iohannis, himself from the centre-right, re-nominated Orban for the job, in what was his first attempt to push for snap election, craved by the liberals.
The crisis deepened when the Parliament failed to vote for a second Orban government and the Constitutional Court asked for a nomination which "must serve the purpose of gathering a parliamentary majority".
The EU member has not held a snap general election since the end of Communism 30 years ago, as the process is complicated and consensus hard to reach.
Romania has local elections scheduled for June and a general election at the end of the year.
The newly designated PM now will have to gain the backing of a majority in parliament to take office, meaning at least 233 MPs from a total of 465.
He then has 10 days to form a cabinet and then seek a confirmatory vote from parliament.