Bloomberg News

Koruna Weakens Versus Euro as Czech Stocks Tumble on S&P Review

December 06, 2011

Dec. 6 (Bloomberg) -- The koruna slid from its strongest in a month against the euro and Czech stocks fell after Standard & Poor’s said it may downgrade credit ratings across the euro region, the main market for exports from the Czech Republic.

The Czech currency depreciated as much as 0.9 percent and traded down 0.7 percent to 25.280 per euro as of 10:40 a.m. in Prague. The PX equity gauge retreated 1 percent to 891.8, led by a 3.2 percent drop for Austria’s Erste Group Bank AG.

Stocks and bonds fell in the euro area and most emerging- market currencies weakened after S&P said Germany and France risk losing their AAA ratings in a review of 15 nations. Yesterday, the Stoxx Europe 600 Index rose to its highest in more than a month after Italian Prime Minister Mario Monti proposed measures to cut the nation’s deficit and debt. The measure fell as much as 0.8 percent today.

“The positive global mood has been halted by the S&P decision,” Gyula Toth, head of strategy for central and eastern Europe, the Middle East and Africa at UniCredit SpA in Vienna, wrote in an e-mailed report to clients today.

The Czech Republic relies on exports for around 70 percent of gross domestic product. Concern that a worsening of the euro area’s debt crisis will hurt demand for Czech goods overshadowed a report from the statistics office in Prague today showing that retail sales rose in October by 1.5 percent from a year earlier.

--Editors: Peter Branton, Tim Farrand

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

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


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