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’Would you join a monetary union like this?
That, essentially, is what many Poles are currently asking themselves.
After all, Poland has been aboard the euro-adoption boat for a long while. Expectations for eurozone entry were so ingrained in the population they even managed to spawn a euro-denominated mortgage binge.
Interventions and bank queues in Eastern Europe
Reuters is reporting that Poland’s central bank stepped into the spot market for the fourth time in less than three months on Wednesday to help support the zloty versus the euro, which was once again nearing levels last seen in 2009.
Oh Schweizer!
In the aftermath of Wednesday’s unexpected rate cut and liquidity measures from the SNB — all designed to weaken the Swiss franc – there was only one thought on many people’s minds.
Was this indeed the top for the Swiss franc? And if so,
What’s as good as gold, but potentially much more volatile?
The Swiss franc.
It has indeed often been cited as being as good as gold.
But while, on the surface, its similarities with the yellow metal might seem obvious, there is one very important difference to bear in mind.
Measuring Italian-ski exposure
Italian jitters, alas, have not dissipated on Thursday. The sovereign was forced to pay severely high yields (some at records) on the sale of nearly €3bn in new bonds, in what many described as a make-or-break test of investor confidence for the eurozone.
A fresh (IMF) sovereign contingent liability
Here’s a story that seems to have sneaked past undetected last Friday (albeit understandably).
It’s the final ratification of the IMF’s New Borrowing Arrangements (NAB) deal, complete with fresh details of exactly who is participating and on what terms.
Casualties of the currency war
This is ironic, Brazil.
That’s a Nomura chart showing the Brazilian government as the biggest ‘loser’ of the currency war. You know the war we’re talking about: Brazil was the first and loudest to declare it in 2010.
[Wilmot's PMI tour] The trend continues
Same sort of messages from Turkey, Poland and Norway: New orders were up 3.2 and 1.7 points, respectively. Norway was basically flat.
Not going to move the global needle but reassuring consistency.
When Latvian interbank rates trade through Euribor
Here’s an interesting datapoint unearthed up by BNP Paribas’ emerging markets deak on Monday.
The Latvian interbank rate — Rigibor — is trading through Euribor for the first time in four years…
…
Just what is Hungary up to?
Adventures in debt management, Hungarian change-the-rules edition.
The Hungarian economic ministry made this odd little statement on Tuesday (translated from the Hungarian via Google, so be warned):
Poland ‘swaps’ out its 2009 budget deficit
Oh dear. It appears some European governments never learn.
News comes to us via Dow Jones on Friday of Poland’s extremely active participation in the interest-rate and FX derivative market as recently as 2009.
About that other ‘P’ in peripheral
Here’s a somewhat surprising finding from BNP Paribas’ Bartosz Pawlowski.
A closer look at the adverse scenario assumptions made by the Committee of European Banking Supervisors (CEBS) for use in the European stress tests reveals one particular recession-defying European country high up in the sovereign haircut leagues.
Hungarian watchdog fines Deutsche Bank on FX swap deals
Fresh on the wire:
RTRS-HUNGARY FIN MKT WATCHDOG FINES DEUTSCHE BANK 90M FORINTS IN RELATIONS WITH CERTAIN FX SWAP DEALS – STATEMENT
Here, meanwhile, follow the key points from the Hungarian language press release via a very rough Google Translation:
National bank of interventionski
A new European central bank turned to currency intervention this week.
As the National Bank of Poland stated simply on its website on Friday:
Narodowy Bank Polski w godzinach południowych dokonał zakupu pewnej ilości walut obcych po korzystnym kursie.
On the matter of ECB swap lines…
FT Alphaville featured a guest post at the end of March by BNP Paribas economist Shahin Vallee, who claimed the ECB had agreed secret currency swap lines with Poland and Hungary in October 2009.
When FT Alphaville asked the European central bank about the swap lines,
IMF squabbles, Polish edition
A bitter row is developing in Poland between the Polish Central Bank (NBP) and the Polish Finance Ministry regarding the country’s use of its $20.5bn IMF credit line.
While an apparently cautious finance ministry believes Poland should extend the facility because,
This little sovereign went to market…
For your consideration, a selection of five-year sovereign CDS spreads from Europe as of Thursday’s close:
And for comparison, some non-European peripheral CDS spreads. First the US:
And representing the CEE,
The other European deficit problem
The European Commission’s position on Greece may have been the key focus of market attention on Wednesday, but there was another country that also managed to draw some criticism from Brussels.
That country was Poland:
What a difference six months makes, in the CEE
In early 2009, central and eastern Europe (CEE) was the region “most blighted by the financial crisis”, as Lex reminded us last week. There were real concerns for foreign banks with big CEE exposure – above all from Austria,
Where’s the Greek CΣΣ contagion?
FT Alphaville mentioned on Monday that the CDS market did not appear to be implying much of a contagion-effect for Central and Eastern Europe in connection with troubles in the Hellenic Republic.
And having on Thursday noted the widening spread between Greek government bonds and German bunds,
Is Poland selling itself for nothing?
Budget deficits are increasingly being perceived as emerging Europe’s biggest problem.
Austria’s Erste Bank — a lender with more exposure to the region than most — picks up on the issue in a recent note,
Managing CEE’s FX addiction
Here’s a great chart from Reuters showing just how addicted many countries in emerging Europe have become to borrowing in foreign currency for everything from second homes to TV sets :
As Reuters notes,
[Outlook 2010] Goldman sees 2010 as ‘exciting, with risks!’
Has Goldman Sachs, beset with a public image problem, turned global economic cheerleader by way of compensation?
The bank has just released its Global Economic Outlook for next year and beyond (Title:
The Emerging Europe debt dog
While the search for yield is setting most emerging markets ablaze in terms of institutional money flow, there is one EM area that appears noticeably excluded from the flow party: Emerging Europe.
As Bloomberg noted on Monday,
Poland is the new Hungary, says BNP Paribas
Oh dear. Poland may have escaped the financial crisis with a positive GDP year to date, but that will not stop the country’s fiscal situation souring in the year to come, according to BNP Paribas emerging markets analyst Michal Dybula.
On the matter of renewing confidence in the Latvian economy
One thing the financial crisis has taught the Western world is that when it comes to defending your reputation, the CEE states are masters of their game.
Who can forget their unity over evil currency speculators?
Or,
A CEE stress snapshot
A quick overview of the situation facing CEE on Wednesday:
Latvia
- The government’s latest debt auction fell flat on Wednesday, with investors picking up only 2.04m of the 24m lats worth of debt on offer.
Poland’s samurai bond
Poland revealed a couple of weeks ago that it was planning to issue some more yen-denominated bonds as it struggles to keep up with its growing budget deficit. Its last yen-denominated debt issue was for Y25bn ($278m) in June 2008 .