PRAGUE, Dec 8 (Reuters) - Hungary"s forint slipped to an
11-day low on Tuesday and Poland"s zloty also fell as a standoff
with the European Union over Budapest and Warsaw"s threat to
veto the bloc"s budget and recovery fund rattled markets.
In Romania, the leu was steady, around 4.873 to
the euro, with investors watching political developments.
Romanian prime minister Ludovic Orban resigned on Monday
after his Liberal party lost Sunday"s election, but his centrist
camp appeared in pole position to form a coalition government
against the victorious opposition leftists.
But eyes were on Hungary and Poland after a senior EU
diplomat said the bloc needed a signal on Tuesday they would
drop their veto or the bloc would have to set things up without
them. Both upheld their veto on Monday evening.
The forint fell 0.25% to 360.83 to the euro on
Tuesday, breaking to the weak side of its recent range between
356-360 and touching its lowest since Nov. 27.
"The forint will keep moving in its downward trend," a
Budapest trader said. "Without the political risks, the forint
could have ended the year around 350 per euro."
Budapest and Warsaw have objected to making the EU money
conditional on respect for the rule of law and democratic norms.
With worries over the flow of funds amid the global
coronavirus pandemic, the risk has been bigger for Hungary
because its economy is smaller than Poland"s.
A Reuters poll last week showed the forint lagging the zloty
and Czech crown next year as economies recover. The leu was also
seen weighed down by fiscal risks.
The zloty was down 0.2% on Tuesday, at 4.48 to the
euro. Commerzbank said the forex market did not look to price in
continued deadlock over the EU budget and recovery fund.
Budapest stocks rose slightly, untouched by the row.
Elsewhere, Prague stocks rose while the crown
gained 0.2%, to 26.445 per euro.
Czech industry rose in October - when restrictions started
amid a large spike in COVID-19 infections - according to data
out on Tuesday. With lockdowns not hitting factories in this
second wave, analysts expect output will maintain some support.
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