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November 8, 2011
Eastern Europe Feels Euro Strain
Emerging-market countries in Europe have battled to limit ugly drops in their currencies over recent weeks, but analysts agree that nothing short of a resolution to the euro-zone crisis will solve the problem.
Continues ...
Eastern Europe has been particularly hard hit as the region's close banking and trade ties with the troubled euro zone have left it sensitive to the crisis engulfing the 17-country bloc.
"Emerging Europe, the Middle East and Africa is, in principle, the region to avoid at all costs, as it is the meeting point of both contagion risks and recession risks," said Benoit Anne, global head of emerging-market strategy at Société Générale in London.
In September, the Polish zloty plunged to its weakest level against the euro since June 2009, while the Turkish lira tumbled some 10% against the dollar in less than two months, hitting a record low last month as the dollar surged to 1.9097 lira. Even the Czech koruna, which often enjoys a haven status in Central and Eastern Europe, wasn't immune from the rout.
The euro, meanwhile, despite being central to much of the euro zone's woes, was trading at $1.3835 Tuesday afternoon in New York, well above its low in January of $1.2905.
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