The forint snapped two days of gains and Hungary’s bond yields rebounded from a seven-year low on concern that U.S. Federal Reserve policy makers will end debt purchases which have fueled investor demand for riskier assets.
Hungary’s currency weakened 0.7 percent to 290.47 per euro by 10:35 a.m. in Budapest, erasing its advance for the week. Yields on 10-year notes increased 17 basis points, or 0.17 percentage point, to 6.163 percent after hitting the lowest since September 2005 yesterday.
Fed board members said they will probably end their $85 billion monthly bond purchases in 2013, according to minutes of their Dec. 11-12 meeting released yesterday. Additional liquidity from central banks in the U.S. and Europe helped the forint gain 8 percent in 2012, the second-biggest advance, after the Polish zloty, among more than 100 currencies tracked by Bloomberg, while Hungarian bonds returned the most in euro terms in 2012 after Greek and Portuguese debt.
“The correction of the New Year’s optimism came because of the Federal Reserve’s minutes,” Gergely Gabler, a Budapest- based analyst at Equilor Befektetesi Zrt., wrote in a research report today. “The negative sentiment can also be felt on the Hungarian market.”
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