Forint Advances as Orban Sees Breakthrough Close in EU Dispute

The forint gained after Prime Minister Viktor Orban said the country was close to a “breakthrough” in its bid to convince the European Union and the International Monetary Fund to allow aid talks to start.

Hungary’s currency appreciated 0.6 percent to 297.76 per euro by 2:14 p.m. in Budapest after retreating to the weakest close in three months yesterday. Hungary’s central bank kept its benchmark rate at 7 percent for a fourth month today, in line with the expectations of all 24 economists surveyed by Bloomberg News.

The European Commission will decide tomorrow whether it will allow Hungary’s bailout talks to proceed, Orban told reporters in Brussels today. The delay in the talks on the aid, which Orban requested five months ago, isn’t allowing the Magyar Nemzeti Bank to ease monetary policy, Brown Brothers Harriman said.

“The bank’s bias is towards cutting, given the expected headwinds to the economy this year, but no action will be taken until an IMF deal is secured,” Ilan Solot, an emerging-market strategist at Brown Brothers Harriman & Co. in London, and colleagues wrote in a research report before the central bank decision.

Orban said the euro region’s executive arm will probably decide to file lawsuits against Hungary on some disputed issues, including the government’s decision to cut the central bank governor’s salary.

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

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.