Oct. 25 (Bloomberg) -- The forint gained for a second day and the cost of insuring against a default by Hungary fell the most in a week as a government official pledged to take more austerity measures to achieve the budget-deficit target.
The currency of Hungary, which has the highest interest rates in the European Union and the biggest debt burden among the club’s eastern members, appreciated 0.7 percent to 278.93 per euro by 3:40 p.m. in Budapest. Improving perceptions of creditworthiness sent Hungarian credit-default swaps 14 basis points lower to 253, according to data compiled by Bloomberg.
While the government believes austerity measures totaling 800 billion forint ($3.7 billion) are enough to keep the budget deficit at 2.7 percent of gross domestic product next year, the same as this year’s target, it’s willing to do more if needed to reach the goal, Zoltan Csefalvay, a state secretary at the Economy Ministry, told analysts and reporters in London today.
“The brutal austerity measures presented in two separate fiscal packages will be enough to keep the budget deficit below 3 percent even if the government misses its actual deficit target,” analysts at the Budapest-based unit of Raiffeisen Bank International AG wrote in an e-mailed report to clients today. “The forint’s high premium remains attractive for investors.”
Hungary sold 60 billion forint of 322-day Treasury bills in an auction today, with investors bidding for more than twice the amount, according to data from the government’s debt-management agency compiled by Bloomberg.
Stocks worldwide and most emerging-market currencies gained as results from companies including BASF SE and Unilever NV beat estimates.
To contact the editor responsible for this story: Gavin Serkin at email@example.com