East European currencies take a rise

The zloty, currency of East European nation Poland, has made gains against the euro following a period of decline as government reports indicate expansion beyond anticipated levels in the East European market.

The Polish statistical office reported that the economy in the country had expanded by almost six percent, a figure compared with just over six percent in the first quarter and above that forecast at 5.6 percent.

Over the month, the zloty has seen a slowdown as fears grow of the widening economic downturn’s arrival in Eastern European markets,
    

Monthly decline on the wane

A climb of almost one percent, to 3.3257 per euro, on the Warsaw market represents a turnaround in decline of 3.7 percent, although the currency remains among those at the foot of the emerging markets table, with interest rate rises expected in the near future.

In the same geographical area, the Hungarian forint registered a rise of 0.9 percent against the euro, closing at 236.63 and keeping a monthly overall loss down to just one percent. Political infighting in Hungary has led to the Prime Minister announcing his willingness to resign should his proposed budget revisions nit be accepted.
    

Hungarian PM threatens resignation

The Prime Minister, Ferenc Gyurcsany, proposes cutting taxes by 1.2 trillion forint over a four-year period, in order to encourage a weak level of economic growth that pervades in the country.

In neighbouring Romania the leu continues to make gains on the euro, standing at a 0.5 percent rise across the month, and the Turkish lira also made a climb, rising by 1.6 percent across the month – the second such gain in succession – against the dollar.
    

Czech koruna remains strong

The Czech Republic saw its currency, the koruna, lose over 3 percent on the euro in the month, with the government expressing the belief that the strength of the currency will exert an effect resulting in lessening trade balance over the next year.

The Slovakian koruna, meanwhile, stood still in the market as the country gears up to enter the euro area at the beginning of next year.

Eastern Europe is an emerging area, with expectations high for economic growth, although the worldwide credit crunch is beginning to have an impact on areas that have previously been unaffected. The continuing friction between Russia and Georgia, further to the east, has also had a detrimental effect on local markets.