Forint Drops Second Day as Hungary Yields Rise on Greece Concern
The forint weakened for a second day and Hungarian bond yields rose as concern Greece’s debt crisis will escalate hurt demand for riskier assets.
Hungary’s currency depreciated as much as 0.5 percent and traded 0.3 percent weaker at 284.83 per euro by 4:48 p.m. in Budapest. Yields on the government’s benchmark 10-year bonds rose three basis points, or 0.03 percentage point, to 6.92 percent.
While the U.S. faces a fiscal cliff of spending cuts and tax increases unless lawmakers act, European governments put off until next week a decision on how to cover additional Greek funding needs, while giving the country two extra years to wrestle down its budget deficit. Hungary, the European Union’s most indebted eastern member, has failed to obtain aid from the International Monetary Fund and the EU for almost a year amid disputes on measures taken to cut the budget deficit.
“All the noise surrounding Greece and the fiscal cliff in the U.S. has put at least a temporary end to market complacency,” Vienna-based Erste Group Bank AG wrote in an e- mailed report today. “The bad boy in central eastern Europe, Hungary, is taking the brunt of the selling pressure in the foreign exchange market.”
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