“The most important thing about money is for it to maintain its stability. You have to choose between trusting the natural stability of gold and the honesty and integrity of politicians. With all due respect, I advise you to vote for gold.”
- George Bernard Shaw
Eastern European currencies crumble as fears of debt crisis grow
Hungary’s forint fell to an all-time low on Monday, and Poland’s zloty slumped to the lowest in five years on plunging industrial output. Half of all loans to the private sector in Poland are in foreign currencies so borrowers face a severe debt shock after the 40pc fall of the zloty against the euro since August.
“We’re nearing the level were things could get out of hand,” said Hans Redeker, currency chief strategist at BNP Paribas.
The mushrooming crisis has already started to spill over into Germany's debt markets, lifting credit default swaps on German five-year bonds to a record 70 basis points. The gap between French and German CDS spreads has narrowed abruptly for the first time since the credit crisis began.
“Investors are beginning to ask whether Germany is going to have to pay for the rescue of Eastern and Central Europe,” he said.
A report by Moody’s released on Tuesday said the region’s banks were coming under severe stress as the property bust combines with a rising debt burden. “Local currency depreciation is a major risk to East Europe banks,” it said.
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/4642259/Eastern-European-currencies-crumble-as-fears-of-debt-crisis-grow.html
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