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Forint Snaps Two Days of Gains as Rate Setters See Easing Room

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July 11 (Bloomberg) -- Hungary’s forint fell for the first time in three days, reversing earlier gains, after two central bankers said it may be possible to cut the European Union’s highest benchmark rate as early as this month.

The forint depreciated 0.2 percent to 288.7 per euro by 5:14 p.m. in Budapest after gaining as much as 0.3 percent earlier today. The government’s benchmark notes due in 2015 advanced, cutting yields four basis points, or 0.04 percentage point, to 7.589 percent.

The planned start on aid talks with the International Monetary Fund and European Commission next week creates room to begin monetary easing, central bankers Ferenc Gerhardt and Gyorgy Kocziszky said today in a joint interview in Budapest. The Magyar Nemzeti Bank on June 26 left its benchmark interest rate unchanged at 7 percent for a sixth month, with rate-setters voting six to one, according to minutes of the meeting posted on the bank’s website today.

Bond yields rose earlier today after data showed the country’s inflation accelerated more than forecast in June and the government said it won’t change a disputed tax law.

Consumer prices rose 5.6 percent in June from a year earlier, the statistics office in Budapest said today, more than the 5.4 percent-estimate of analysts in a Bloomberg survey. Hungary won’t change its new tax on financial transactions even if the European Central Bank objects to the levy, Prime Minister Viktor Orban said in a HirTV interview yesterday, a week before a delegation from the International Monetary Fund and the European Union is set to visit Budapest to discuss the country’s aid request.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net