Forint Snaps Four-Day Drop as Hungary Yields Decline at Auction
The Hungarian forint snapped a four- day losing streak against the euro and yields dropped at an auction of three-month government debt as demand lagged in the first trading day after Christmas holidays.
The forint strengthened 0.8 percent to 291.51 per euro by 5 p.m. in Budapest, advancing the most since Nov. 22. Hungary sold 35 billion forint ($160 million) of three-month Treasury bills today, 15 billion forint less than planned, as the average yield dropped to 5.47 percent, the lowest this year, from 5.63 percent at the last auction of the same maturity on Dec. 18.
“There isn’t a lot of activity,” Akos Kuti, a Budapest- based analyst at broker Equilor Befektetesi Zrt., said by phone. “As for the forint, it’s a classic correction after the past three days and shows how the carry trade is still attractive for investors.”
The forint dropped 1.4 percent against the euro between Dec. 21 and Dec. 26, touching a six-month low of 295.65 when traders in Budapest were on their Christmas holiday and as U.S. lawmakers wrangled over a budget compromise to avoid more than $600 billion in tax increases and spending cuts that take effect Jan. 1. Negotiations are scheduled to resume today.
The forint has strengthened 8.1 percent this year, the most among all currencies tracked by Bloomberg after the Polish zloty, as liquidity-boosting measures and record-low interest rates in the U.S. and Europe drew investors to higher-yielding assets.
Investors today bid for 62 billion forint in three-month bills, the least since Aug. 3. That compared with 173 billion forint in bids last week.
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