Euro slides as Hungary says economy in trouble

The Times ^ | 6/5/2010 | Alexandra Frean, New York and Adam Sage, Paris

[bruinbirdman]

The euro was trading at $1.2051, down from $1.2158 late on Thursday. It is the first time that it has dropped below the $1.20 mark since March 2006.

Hungary’s markets also fell sharply after a spokesman for Viktor Orban, the Prime Minister, suggested that his country had only a slim chance of avoiding a Greek-style debt crisis — although he said that it would do so.

The new Hungarian centre-right Government, sworn in less than a week ago, said that it would soon reveal plans to tackle the economy’s problems. It has said it wants to boost growth through tax cuts and economic stimulus measures.

Peter Szijjarto, the Prime Minister’s spokesman, said that his Government was “ready to avoid the path that Greece took ... After realising what reality is, we will not hesitate to act.”

Mr Orban said that any action that his Government took could involve only “patching up” the economy. “Measures aimed at improving the financial situation must be linked with deep structural changes,” he said. His comments followed a warning from the European Commission on Thursday that Hungary must cut its budget deficit faster.

After the Government’s comments, the Hungarian forint fell 2 per cent against the euro to a one-year low of 289.80, before recovering slightly.

Market turmoil was also fuelled by market rumours in Paris that Société Générale was set to announce heavy losses in its derivatives division.

The Paris-based bank refused to comment, but one analyst said there was little evidence to substantiate the speculation.

“No one is quoting a precise figure and it’s the sort of rumour you get every two or three months — in fact, it’s more of a feeling than a rumour really,” he said. “There’s no reason to suppose there’s anything in it, but the markets are particular

[raybbr]

The euro was trading at $1.2051, down from $1.2158 late on Thursday. It is the first time that it has dropped below the $1.20 mark since March 2006.

I'm a bit confused. In what math is $1.2051 lower than $1.2000?

[I_Like_Spam]

The Euro dipped below $1.20 yesterday afternoon, but has apparently bounced back a tad.