The forint rebounded from the biggest drop in more than a month as Hungarian manufacturing expanded for a third month and on speculation the European Central Bank will deliver on a pledge to defend the euro.
The Hungarian currency appreciated 0.4 percent to 280.65 per euro by 5:17 p.m. in Budapest, after weakening 1.3 percent yesterday in the steepest decline since June 28.
Hungary’s purchasing managers’ index was 51.9 in July, MLBKT, the company which compiles the data, said in a report today. A reading above 50 on the PMI, as reported by the purchasing managers of 100 manufacturing companies, indicates an expansion in output. June’s PMI was 52.8. The ECB will announce a policy decision tomorrow after ECB President Mario Draghi pledged to do “whatever it takes” to preserve the euro.
The forint may trade in the 277 to 288 forint-per-euro range this week, depending on the steps the ECB will take, Peter Karsai, a Commerzbank AG trader in Budapest, said in an e-mail today. “Whether the forint will trade in the stronger or weaker end” of the range “will mostly be determined by Mario Draghi’s speech,” he said.
The forint reached its strongest level in more than 10 months on July 30 after Hungary ended the first round of loan talks with the International Monetary Fund, which the Washington-based lender said had been “constructive.”