Forint Heads for Third Weekly Gain as OTP Rallies on Bank Talks

The forint headed for the third week of gains and Hungarian stocks rose as Prime Minister Viktor Orban prepared to meet with chief executives of lenders after reaching a deal with them on foreign-currency loans.

Hungary’s currency appreciated 0.4 percent to 300.33 per euro. A close at that level would mean a 0.5 percent weekly rally, the third in a row, which is the longest streak since April. The benchmark BUX stock index (BUX) gained 2.5 percent to 17,454.82 by 9:50 a.m. in Budapest. OTP Bank Nyrt. (OTP), Hungary’s largest lender, rallied 3.7 percent to 3,266 forint.

“The positive news is that the government and banking sector have reached an agreement on foreign-currency mortgages,” Gillian Edgeworth, a London-based economist at UniCredit SpA, wrote in a research report today.

Orban’s government yesterday agreed to share the cost of easing foreign-currency borrowers’ debt burden, promised to cut the nation’s bank tax from the highest in Europe, and to consult lenders before taking further action. That contrasts with the government’s unilateral September decision to force banks to swallow losses on foreign-currency loans by allowing borrowers to repay at discounted exchange, which the banks have said may cost them as much as 200 billion forint ($868 million).

Orban will meet executives from the banks involved in yesterday’s agreement at 11 a.m. in parliament today, his office said in an e-mail yesterday.

Orban’s earlier repayment plan prompted Hungarian lenders to sue the government in the country’s Constitutional Court and urged the European Union to take action against the government.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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