By Ewa Krukowska
Feb. 3 (Bloomberg) -- The Hungarian forint tumbled to a record low against the euro as risk aversion spread and concern deepened the economic slowdown will worsen.
The forint extended this year’s decline to 11.4 percent, the second-biggest drop among emerging-market currencies tracked by Bloomberg, as Hungary heads towards its worst recession in 15 years. The country was the first European Union member to seek international aid to avert a default last year, prompting a 20 billion-euro ($26 billion) emergency loan from the International Monetary Fund, the World Bank and the European Union.
“The forint is being dragged down by negative regional news,” said Nigel Rendell, senior emerging-markets strategist at RBC Capital Markets in London. “The weakening of the Russian ruble and the bank nationalization in Kazakhstan are weighing on the markets. They “may test the resolve of the central bank in Hungary” and in Russia, he said.
The forint dropped as much as 1.5 percent to 300.37 against the euro and was at 299.60 at 12:54 p.m. in Budapest. It earlier broke through the key 300 per euro level, where option barriers were set, according to BNP Paribas.
The level at which the forint is trading is of “extreme concern,” Prime Minister Ferenc Gyurcsany said yesterday after a meeting with central bank President Andras Simor.
The Polish zloty declined 1.6 percent to 4.5561 per euro, trading at a 4 1/2-year low, and the Czech koruna fell 0.6 percent to 28.445 per euro, the weakest since July 2007.
“When they look at eastern Europe, people see problems with current-account deficits, banking systems and rapidly slowing growth, or even recession in some countries,” Rendell said. “Everything’s going in one direction and further currency weakness seems almost inevitable.”
To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net
Posts
No comments:
Post a Comment