The forint advanced, extending the biggest appreciation among emerging-market currencies this quarter, as data signaled that the economy in Hungary and its main trading partner, Germany, may be closer to a recovery.
German factory orders unexpectedly jumped for a second month in March, suggesting Europe’s largest economy is starting to grow again. In Hungary, whose recovery from recession is dependent on boosting exports to Germany and the wider euro area, industrial production rose 0.4 percent in March from February, compared with a 0.7 percent decline from a year earlier. Production starting at a Daimler AG car plant in Hungary improved the data, statistician Miklos Schindele told reporters in Budapest today.
The third consecutive month-on-month advance in Hungary’s industrial output “obviously helped” the forint, as did the better-than-expected German data, Karoly Bamli, a Budapest-based trader at Commerzbank AG, wrote in an e-mail.
Hungary’s currency appreciated 0.3 percent to 296.16 per euro by 2:33 p.m. in Budapest. The forint has advanced 2.7 percent so far this quarter, the largest gain among more than 20 emerging-market currencies tracked by Bloomberg. Yields on the government’s benchmark 10-year bonds dropped one basis point, or 0.01 percentage point, to 5.086 percent.
The European Commission last week cut its projections for the euro area, predicting the 17-nation economy will shrink 0.4 percent this year after a 0.6 percent contraction in 2012. The European Union’s executive arm sees Hungary’s gross domestic product growing 0.2 percent in 2013 after shrinking 1.7 percent last year.
Today’s output figures showed the “rebound in industry continues,” Zoltan Arokszallasi and Orsolya Nyeste, Budapest-based analysts at Erste Group Bank AG, wrote in an e-mailed report.
While industry may have a positive contribution to Hungary’s first-quarter gross domestic product, “no spectacular turnaround is expected in the near future,” Arokszallasi and Nyeste said.