The forint weakened for the first time in four days as Hungary’s economic sentiment fell to an eight-month low and retail sales dropped, adding to speculation the central bank will cut rates to help the economic recovery.
Hungary’s currency depreciated 0.3 percent to 282.88 per euro by 4:36 p.m. in Budapest. Yields on the government’s benchmark bonds due in 2022 fell four basis point, or 0.04 percentage point, to 7.297 percent.
The sentiment index fell to minus 25 in September from minus 24.7 in August, the lowest since January, the GKI research institute in Budapest said in an e-mailed statement. Retail sales slid 2.6 percent in July from a year ago, the statistics office in Budapest said in a report today. The Magyar Nemzeti Bank, which last month reduced its base rate by 25 basis points to 6.75 percent, will cut by the same amount tomorrow, according to 14 of 26 analysts polled by Bloomberg, with 12 expecting no change.
“The motives for easing remain in place and so see the balance of risks as just favoring another cut,” Christian Lawrence, a London-based strategist at Rabobank International, wrote in a research report today, citing Hungary’s “weak” economic data.
European stocks dropped as Germany and France struggled to overcome a stalemate on the timing for banking union and as data added to concern about the strength of China’s economy.