Forint Weakens for Second Day as Central Bank Warns on Tax Plan
Hungary’s currency depreciated a second day after the central bank warned the government may miss revenue targets on a proposed financial transaction tax and data showed the budget gap widened in June.
The forint weakened 0.2 percent to 286.34 per euro by 4:26 p.m. in Budapest. The yield on the government’s benchmark 10- year bonds fell two basis points, or 0.02 percentage point, to 7.85 percent.
The transaction tax will probably miss the Cabinet’s revenue goal for 2013 and may violate European Union rules, the central bank said today. The tax proposal will feature in aid talks with the International Monetary Fund, Antal Rogan, the head of ruling party lawmakers, said on TV2 on July 3. Hungary’s budget gap increased to 90 percent of the full-year target by the end of June, the Economy Ministry said today.
“The market is focusing on the central bank’s opinion on the 2013 budget,” Karoly Bamli, a Budapest-based trader at Commerzbank AG, and colleagues wrote in an e-mail today.
The cost of insuring against default on Hungary’s debt with credit-default swaps rose five basis points to 499 according to data compiled by Bloomberg.
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