Hungarian asset prices slipped on Friday before an expected cut in interest rates and a court proposal on lawsuits over foreign-currency loans. Emerging European currencies weakened against the euro. Hungary's main equity index eased 0.3 percent before recovering some ground. Other Central European markets gained.
Bucharest's main index rose a quarter percent, after shareholders of Romanian restitution fund Fondul Proprietatea approved Franklin Templeton for a new term as manager of the $4.6 billion investment fund.
The Hungarian forint, Polish zloty and Czech crown were each 0.1 percent lower against the euro. The Romanian leu was flat. Hungarian government bonds eased.
Budapest dealers said a proposal due on Monday from Hungary's top court, the Kuria, may weaken the country's assets. The proposal involve lawsuits against banks by Hungarians who took out foreign-currrency loans.
"If the Kuria's proposal is very negative to banks, that could be bad to the forint," one currency dealer said.
The court will outline a procedure for resolving claims related to the foreign currency loans. It will meet on December 16 to discuss the proposal, which could deepen losses of Hungary's heavily taxed banks.
Hungary's central bank is expected to cut its base rate by 20 basis points to 3.2 percent on Tuesday in a move that may put further pressure on the forint. The bank has cut rates from 7 percent in August last year to help the economy.
The Czech central bank intervened to weaken the crown last week, to make Czech exports more competitive and guard against deflation. The crown fell more than 5 percent after the move.
Czech central bank Governor Miroslav Singer said on Friday that third-quarter flash gross domestic product data show the country's struggling economy remains weak.
"The preliminary data for the third quarter signal, at best, movement along the bottom," he told a conference.
Comments
Comments are closed.