Bloomberg News

Forint Strengthens Fourth Day as Polish Election Boosts Region

October 10, 2011

Oct. 10 (Bloomberg) -- The forint strengthened for a fourth day and the koruna gained as Polish Prime Minister Donald Tusk’s election victory increased bets the region’s nations will be able to sustain their public finances.

The currency of Hungary, the most indebted eastern member of the European Union at the end of 2010, appreciated 1.2 percent to 293.27 per euro by 5:06 p.m. in Budapest, the strongest close since Sept. 29. The zloty gained 1.6 percent to 4.3104 and the Czech koruna rose 0.9 percent to 24.666.

Tusk’s ruling Civic Platform won 39.2 percent of the vote, according to official results from 99.5 percent of precincts. Tusk’s lead in election results spurred a rally in zloty bonds on expectations his next administration will cut the budget deficit he allowed to quadruple since 2007. Debt due on 2021 climbed for a fourth day, reducing the yield by nine basis points, or 0.09 percentage point, to 5.67 percent.

“Yesterday’s Polish parliamentary vote should come as a relief for the currency stories in the whole region, with probably the most important message being a continuity in the political backdrop,” Simon Quijano-Evans, a London-based economist at ING Groep NV, wrote in a research report.

European stocks rallied and the euro surged after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged to devise a plan in three weeks to stem the debt crisis.

“It’s good news in the region that the incumbent governing parties in Poland ended the election with a good result,” Peter Karsai, a trader at Commerzbank AG in Budapest, and colleagues wrote in an e-mail. “Yesterday’s meeting between the French president and the German chancellor was also well received.”

--Editors: Wojciech Moskwa, Gavin Serkin

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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