Forint Bond Yields Drop to Year-Low on Fed Stimulus Measures

Hungarian benchmark bonds gained, sending yields to a one-year low as U.S. Federal Reserve stimulus measures boosted investor appetite for riskier emerging-market assets.

A rally in the government’s five-year bonds cut yields by eight basis points, or 0.08 percentage point, to 6.838 percent. The currency of Hungary, the most indebted eastern member of the European Union, depreciated 0.2 percent to 282.78 per euro by 5:09 p.m. in Budapest, paring its five-day gain to 0.6 percent, the first weekly advance in more than a month.

Developing-nation stocks jumped the most in 11 months and currencies gained after the Fed said it will expand holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month and hold the federal funds rate near zero “at least through mid-2015.”

“The Fed decision caused a substantial drop in yields,” Zoltan Arokszallasi, an analyst at Erste Group Bank AG, wrote in an e-mailed report today.

The International Monetary Fund has no date set for a return visit to Hungary to continue financial-aid talks, Gerry Rice, a spokesman for the Washington-based lender, told reporters yesterday.

The delay in the IMF talks limited the forint’s rally this month, Levente Blaho and Adam Keszeg, analysts at Raiffeisen Bank International AG (RBI), wrote in an e-mailed report today. Hungary’s currency advanced 0.5 percent in September, less than the 1.8 percent jump for the Czech koruna and 2.6 percent rally for the zloty, the best performer worldwide.

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