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Forint Jumps, Yields Slide to 7-Year Low as Loan Meetings Start

The forint advanced to a one-month high and yields on Hungary’s 10-year bonds hit a seven-year low as the central bank started meetings with commercial lenders to work out the details of a plan to boost loan growth.

Hungary’s currency extended last week’s gains, the biggest in nine months, after Magyar Nemzeti Bank President Gyorgy Matolcsy announced plans to provide interest-free loans to help expand credit to smaller companies. The program, whose details will be worked out after talks with banks, allayed concern of Hungary using more unconventional tools to revive economic growth, according to analysts including Mariann Trippon at CIB Bank Zrt., the Budapest-based unit of Intesa Sanpaolo SpA. (ISP)

“Since the fears about extraordinary monetary easing played a big role in the forint’s decline this year, the relief may bring more gains in the coming days,” Levente Blaho and Adam Keszeg, Budapest-based analysts at Raiffeisen Bank International AG (RBI), wrote in an e-mailed report today.

The forint gained 0.7 percent to 296.58 per euro by 12:06 p.m. in Budapest, paring losses so far in 2013 to 1.8 percent. Yields on the government’s 10-year bonds fell 13 basis points, or 0.13 percentage point, to 5.888 percent, the lowest since Sept. 2005, according to data compiled by Bloomberg.

Central bankers today met with Sandor Csanyi, chief executive officer of OTP Bank Nyrt., Hungary’s largest lender, and other commercial bankers in the first of a “regular” series of consultations, the MNB said in a statement on its website. The commercial bankers welcomed the plan, it said.

Julia Kiraly, a deputy president who opposed interest rate cuts carried out in each of the past eight months, resigned today. Kiraly, whose term in office was due to end in July, cited Matolcsy’s overhaul of staffing at the bank and the way Matolcsy conducts Monetary Council meetings for her decision.

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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