East European Currencies: Hungarian Forint, Polish Zloty Slide

By Yon Pulkrabek

Sept. 15 (Bloomberg) -- Hungary's forint slumped against the euro as Lehman Brothers Holdings Inc.'s bankruptcy filing stoked concern about credit-market losses, damping demand for higher- yielding emerging-market assets. The Polish zloty dropped.

The forint slid the most in six weeks as Lehman filed for bankruptcy in Manhattan today. The collapse of the bank, which listed more than $613 billion of debt, dwarves WorldCom Inc.'s insolvency in 2002 and Drexel Burnham Lambert's failure in 1990. The Hungarian currency was also buffeted because the Hungarian government faces a vote to dissolve parliament today.

The forint is getting ``hit by risk aversion,'' said Jon Harrison, an emerging-markets currency strategist in London at Dresdner Kleinwort. ``There are risks because inflation is peaking and rates are going down and there is political risk.''

Hungary's currency tumbled to as low as 241.32 per euro, the biggest drop since July 31 on an intraday basis. It was at 240.92 as of 12:30 p.m. in Budapest, from 237.45 at the end of last week.

Hungarian Prime Minister Ferenc Gyurcsany wants the country's lawmakers to vote today on an opposition-sponsored motion to dissolve the legislature, paving the way for early elections.

Gyurcsany has the support of the majority of lawmakers after former governing coalition party Free Democrats' Alliance said it doesn't support the move to call an election, the ruling Socialist Party said on its Web site.

Zloty Drops

Elsewhere, the Polish zloty fell the most in a week, dropping 1.4 percent to 3.3749 per euro. Central bank Governor Slawomir Skrzypek said two days ago the government's forecast for economic growth of 4.8 percent next year ``seems to be very optimistic.''

``There is a downside risk to this forecast,'' Skrzypek told reporters at a meeting of European Union finance officials in Nice, France, on Sept. 13. The central bank governor also said Prime Minister Donald Tusk's plan to adopt the euro by 2011 is ``a challenge.''

The Czech koruna declined to 24.199 per euro, after rising to 24.381, from 24.151 on Sept. 12. The Romanian leu declined to 3.6200 per euro, from 3.6071.

Turkey's lira sank 1.9 percent to 1.2624 against the U.S. dollar, from 1.2390 from the end of last week.

To contact the reporter on this story: Yon Pulkrabek in Prague at ypulkrabek@bloomberg.net