The forint headed for a second week of declines after Hungary’s central bank cut its benchmark rate for the second month in a row and announced a current-account surplus below investors’ expectations.
The forint weakened 0.7 percent to 286.12 per euro by 4:26 p.m. in Budapest, bringing its five-day depreciation to 1.4 percent, the most among more than 20 emerging-market currencies tracked by Bloomberg. It has advanced less than 0.1 percent since the end of June, the third consecutive quarter of gains, according to data compiled by Bloomberg. The yield on Hungary’s benchmark five-year bonds rose one basis point, or 0.01 percentage point, to 6.82 percent, the data show.
The Magyar Nemzeti Bank reduced its benchmark two-week deposit rate on Sept. 25 by 25 basis points to 6.5 percent, still the highest in the 27-member European Union, to help Hungary emerge from a recession. It cut the base rate by the same amount in August. Hungary’s current-account surplus was smaller than estimated in the second quarter, the bank said today, while revised data showed a deficit in the previous three months.
“We see upward risks to our euro-forint forecasts” of 282.5 on Dec. 31, 2012 and 275 at the end of 2013 because of the weaker current-account balance as well as rate cuts, Zoltan Arokszallasi and Orsolya Nyeste, Budapest-based economists at Erste Group Bank AG, wrote in an e-mailed report today.
The surplus was 519 million euros ($671 million), compared with a revised 7 million-euro shortfall in the first quarter and a surplus of 398 million euros a year earlier, the bank said. The median projection in a Bloomberg survey of seven economists was for a 550 million-euro surplus. The seasonally-adjusted current-account surplus was 367 million euros, it said.