Romania and Bulgaria’s credit ratings depend more on the two country’s monetary and fiscal policies, and entry to the euro zone, than on the precise date of their EU entry, according to a report released by the rating agency Standard and Poor’s. The agency warns that Romania is exposed to the risks of an overheating economy and budget deficit. The rating agency explains that the co-financing required to receive EU funds could jeopardise the macroeconomic balance in Romania where tax revenue as a percentage of GDP is low.
The National Bank of Hungary said that inflation in the first quarter of 2006 was higher than expected, but that the outlook is not worrying. The Bank will publish its quarterly inflation report on Monday, the same day the bank's Monetary Council will decide on rates. Vice governor and rate-setter Peter Adamecz said the rate outlook hinged on developments in global markets and the Hungarian government's upcoming measures to consolidate the budget.
Standard Chartered analysts expect the Malaysian ringgit to appreciate to up to 3.52 ringgits against the US dollar by the end of the year. They said that the dollar would remain weak, and that the US Federal Reserve is at or close to the end of a series of rate hikes. Chief economist Joseph Tan said that the ringgit is one of the world’s most undervalued currencies, but that while it will sit has strengthened against the dollar it has not strengthened aginst regional currencies.
The price of zinc continued to soar this week as part of a broad-based, fund-driven rally affecting most London Metals Exchange-traded metals. The LME spot price touched $3,792/tonne ($1.72/lb) in trading on May 11, the latest record high. Zinc prices at that point were up about 45% since the beginning of April. Commodity investment funds are behind the latest round of price volatility, market observers say. There have been complaints that sellers are becoming increasingly scarce in a fast-rising market, a factor said to be exacerbating the price rise.
Mexican GDP expanded 5.5% year-on-year in the first quarter of 2006, the country's national statistics institute INEGI reported. The construction sector grew 8.3%, manufacturing grew 7.1%, and industrial output grew 7%.