Eastern European Currencies Tumble After EU Leaders Reject Rescue

Eastern European Currencies Tumble After EU Leaders Reject Rescue

Currencies across Eastern Europe plunged Monday after European Union leaders rejected a huge rescue package for its newest members.

EU officials in Brussels rejected suggestions that the foreign exchange markets were reacting to decisions made at a summit meeting Sunday, where leaders agreed only to consider any bailouts on a case-by-case basis.

The EU monetary affairs commissioner Joaquín Almunia told reporters in Brussels that the EU was providing a huge amount of support to its eastern members. But he conceded more may be needed for some countries.

The hardest hit was Hungary, whose prime minister, Ferenc Gyurcsany, had unexpectedly asked for up to €180 billion, or $226.3 billion, to prop up the eastern economies. The Hungarian forint fell 2.9 percent against the euro, which was worth more than 308 forints.

In Poland, which is in relatively better shape, the zloty was down 2.9 percent, with the euro at almost 4.48 forints.

Along with Hungary, several countries in the region - notably Latvia, Bulgaria and Romania - are experiencing the impact of a very tight squeeze on credit, rapidly weakening currencies, layoffs and a potential loss of foreign investment in the coming months.

March 2, 2009

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