Forint Gains as Greece Aid Optimism Outweighs Interest Rate Cut
The forint headed for the biggest gain in more than a week as a deal among euro-area finance chiefs on aid for Greece boosted demand for riskier assets, outweighing Hungary’s fourth rate cut in as many months. .
The currency of the most indebted country in the east of the European Union, advanced as much as 0.7 percent to 279.77 per euro, the most on a closing basis since Nov. 19. It traded at 280.65 a euro as of 3:37 p.m. in Budapest. Yields on the government’s benchmark three-year bonds rose two basis points, or 0.02 percentage point, to 6.079 percent.
The Magyar Nemzeti Bank reduced its benchmark interest rate by a quarter-point to 6 percent today, citing the “favorable global financial environment” in a statement. Emerging-market assets rallied after European finance ministers eased the terms of Greece’s debt payments.
“The improvements in the external environment are supporting the domestic currency,” Gergely Gabler, a Budapest- based analyst at broker Equilor Befektetesi Zrt., wrote in an e- mailed report. “We expect further monetary policy easing as long as the capital market environment remains favorable,” Gabler said.
The central bank’s decision matched the forecast of 23 economists in a Bloomberg survey of 24 analysts, with one expecting no change.
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