Hungary’s forint gained, avoiding a selloff in emerging-market currencies, as the central bank’s decision to bring an end to its cycle of cutting interest rates supported appetite for the nation’s assets.
The currency rose 0.8 percent to 309.08 per euro by 5:19 p.m. in Budapest, the best performance among 24 developing nations tracked by Bloomberg. That compares with a 2.5 percent slump in Russia’s ruble as oil headed for the lowest close since March. Hungarian government bonds climbed, sending yields down three basis points to 3.66 percent.
The Hungarian central bank’s vow to end a five-month easing cycle last week has helped the forint to the best performance among emerging markets this month. Bank President Gyorgy Matolcsy on July 21 pledged to keep the two-week deposit rate at a record 1.35 percent for a “very long” period after lowering it 29 times in three years.
“The end to the rate-cut cycle has removed one source of uncertainty,” Gergely Palffy, an economist at Raiffeisen International Bank AG’s Hungarian unit, said by phone on Monday. While the forint used to swing between the group of more stable eastern European currencies and the volatile lira and South African rand, the central bank’s announcement has pushed it back toward the former, he said.
Raiffeisen sees the forint trading between 310 and 315 per euro until the the end of the year. The currency will remain largely unchanged at 311 per euro by the end of the year, according to the median estimate of 28 economists in a Bloomberg survey.