The forint rose the most this week and Hungary’s bond yields fell as data showed economic growth accelerated more than economists forecast, indicating a recovery from last year’s recession has gathered pace.
The currency of Hungary, the most indebted nation in the east of the European Union, gained 0.2 percent to 298.1 per euro by 3:33 p.m. in Budapest. The increase pared the forint’s drop this year to 2.3 percent, the fourth-best performance among currencies in developing Europe and Africa tracked by Bloomberg. Yields on the government’s benchmark 10-year bonds fell six basis points, or 0.06 percentage point, to 5.83 percent.
Gross domestic product climbed 0.8 percent from the previous three months, according to preliminary data published today. The median estimate of 11 economists in a Bloomberg survey was for 0.4 percent growth. GDP rose 1.7 percent from a year earlier, the fastest since the first quarter of 2011. The figures will help boost government revenue as Hungary works to keep the budget deficit within the EU’s 3 percent per GDP limit, the Economy Ministry said in an e-mailed statement.
“The forint immediately reacted to the favorable data by strengthening,” Imre Kerekgyarto, a Budapest-based currency trader at Commerzbank AG, wrote by e-mail.
The central bank has lowered borrowing costs for 15 consecutive months, cutting the benchmark rate by more than half to a record-low 3.4 percent in October to buoy the economic recovery.
The forint probably won’t exit the 295-300 range per euro “despite the waves caused by the GDP data,” Kerekgyarto said.