March 2 (Bloomberg) -- Hungary’s forint tumbled the most in nine weeks after European Union leaders rejected pleas for a region-wide aid package and Fitch Ratings cut the country’s rating to negative.
The forint dropped as much as 2.7 percent, the biggest decline since Dec. 26, to 307.52 per euro at 6:08 p.m. in Budapest, near the record low of 309.71 on Feb. 17. The Polish zloty weakened 2.5 percent to 4.7734 versus the euro and the Czech koruna depreciated 0.3 percent. Eastern European stocks dropped to the lowest in 5 1/2 years.
Hungary, which was allocated $15.7 billion from the International Monetary Fund last year, may have its BBB credit rating cut by Fitch because slowing growth and the plunge in the forint has prevented the bailout from improving financial stability, the company said today. EU leaders yesterday vetoed a Hungarian appeal for 180 billion euros ($228 billion) of loans for eastern European countries, bowing to German concerns that it would put too much pressure on budget deficits.
“The failure of yesterday’s summit to provide any fresh thinking about Eastern Europe’s crisis means that investors are faced this week with the prospect of ‘more of the same’,” David Lubin, chief emerging-market economist at Citigroup Inc. in London.
The forint has dropped 22 percent versus the euro in the past six months and 29 percent against the Swiss franc, increasing the “burden for holders of foreign-currency debt, further depressing the economic growth outlook and increasing the likelihood of stress in the financial system,” Fitch said today.
The forint has dropped 22 percent versus the euro in the past six months and 29 percent against the Swiss franc, increasing the “burden for holders of foreign-currency debt, further depressing the economic growth outlook and increasing the likelihood of stress in the financial system,” Fitch said today.
The weakest fall first with more to follow. The onion gets peeled back one layer of a time.
No comments:
Post a Comment