The party ousted from government in 2009 after presiding over Iceland’s financial meltdown emerged as the biggest winner in the weekend’s parliamentary elections as talks start to form a ruling coalition.
Icelanders, burdened by more than four years of hardship, are poised to oust the government and return to power the parties that steered the island through a banking-led boom that ended in economic ruin 2008.
Hungary’s forint dropped to a nine- month low as falling inflation stoked prospects for interest- rate cuts and lawmakers backed constitutional changes some European Union members say undermine democracy.
Lithuania’s new government emerging from this weekend’s elections will have to keep cutting the budget deficit or risk higher interest rates, said Lars Christensen, chief emerging-markets economist at Danske Bank A/S.
Prime Minister Viktor Orban plans to curb foreign banks’ presence in Hungary, risking a deepening clash with the European Union and lifting the cost of insuring the country’s bonds against default to a five-month high.
Iceland completed its investigation of the financial fraud that led to the island’s 2008 collapse with the top regulator warning that the bank system is still too weak to survive a free-floating krona.
Czech policy makers who have said interest rates are too low “might be wrong” as inflation remains subdued and an early rate increase may “risk derailing the fragile recovery,” Danske Bank A/S said today.