Hungary’s Forint Slides to Week Low on Global Slowdown Concern
The forint depreciated to the lowest in a week as worse-than-expected Chinese trade data and French industrial output signaled the global economy is slowing, curbing appetite for riskier emerging assets.
The forint slid as much as 0.8 percent to 279.09 per euro, the weakest since Aug. 3, and traded at 277.07 at 5:21 p.m. in Budapest. That pared the forint’s weekly advance to 0.3 percent, making it the third-worst performer among more than 20 emerging- market currencies tracked by Bloomberg.
China reported exports growth of 1 percent in July from a year earlier, missing all estimates in a Bloomberg survey of 32 economists. French industrial output stagnated in June from May compared with analyst estimates for 0.1 percent growth, data from the statistics office Insee showed. The U.S. Department of Agriculture will cut its domestic corn-crop forecast to the lowest in six years as the country faces its worst drought since 1956, economists said before a report today.
The forint has “disproportionately more room” to weaken from current levels than to add further gains as “all the good news” has been priced in by the market, Roderick Ngotho, an emerging-market strategist for Royal Bank of Scotland Group Plc in London, wrote in an e-mailed note today. “The key bit of news that is not yet out -- a successful completion of negotiations with the International Monetary Fund -- has been taken by the market as a foregone conclusion.”
Hungary will resume negotiations with the IMF and the European Union in September as the country signaled it was ready to change a financial-transaction tax criticized by the European Central Bank, government chief negotiator Mihaly Varga told HirTV on July 26. The Cabinet may reach an agreement with international lenders “by the end of the autumn,” Varga said.
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