BUDAPEST/BUCHAREST: The forint failed to benefit from good Hungarian budget figures on Wednesday as the continuing slide of the yuan and worries over the Chinese economy knocked down risky assets in global markets.
Central Europe's most liquid currencies, the zloty and the forint eased half a percent against the euro by 0952 GMT.
The forint fell even though Economy Minister Mihaly Varga told a news conference that Hungary's budget deficit was about 2 percent of economic output last year, below the 2.4 percent planned.
Expectations of good budget news had already helped lift the forint on Tuesday. It gave up those gains on Wednesday when the international market mood soured, but remains well within the past six months' ranges, traders said.
"(The forint) is still outperforming the zloty," one Budapest-based currency dealer said.
Hungary's currency and government bonds have outperformed much better rated Polish assets in past months and are likely to continue to do so in early 20l6, one Budapest-based fixed income trader said.
The zloty fell in international trade, with Warsaw markets closed for the Epiphany holiday. It touched a new 3-week low at 4.329 against the euro in early trade and is 8 percent weaker from its peak last year.
It has been under pressure due to tension between Warsaw and the European Commission over Poland's new constitution court and media laws, which boosted the influence of the new cabinet, and concerns over the government's plans to increase spending.
The government has invited the European Commission's representative in Warsaw to discuss the concerns of Brussels over the new Polish laws on Friday.
Other regional currencies were little changed apart from the dinar which firmed 0.2 percent after repeated euro sales in the market by the Serbian central bank to support the local currency.
Romania's leu was flat, after briefly plunging to levels near 22-month lows in sporadic early trades.
ING said in a note on Romanian markets that the fall of the yuan weighed on sentiment but the impact on Central Europe was likely to remain small relative to other emerging markets.
"Thus, we expect a spillover from the EM (emerging markets) sell-off into RON (leu) markets to be rather limited and look for only moderate RON weakening ahead of the NBR (Romanian central bank) meeting tomorrow," it said.
Analysts expect Romania's central bank to keep interest rates on hold on Thursday, but some of them have said that it may ease policy via further cutting commercial banks' mandatory reserve requirements.
Comments
Comments are closed for this article.