Hungary’s forint gained, extending the biggest monthly advance in emerging markets, after the central bank pledged to end a cycle of interest-rate cuts.
The forint strengthened 0.4 percent to 307.53 per euro on Friday, taking its gains in July to 2.5 percent, the most since March. The National Bank of Hungary’s promise last week to halt a period of cuts to borrowing costs helped the forint recover from losses that dragged it to a five-month low earlier in the month.
Central Bank President Gyorgy Matolcsy on July 21 vowed 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. As falling commodity prices and political turmoil hit currencies from Russia to Brazil, accelerating economic growth, an end to monetary easing and support from the European Central Bank’s purchases have helped buoy currencies in developing European countries.
“Hungarian monetary policy has given the forint that extra boost,” said Mark Cudmore, a London-based Bloomberg strategist, who expects the currency to strengthen past 300 per euro by year-end.
The forint, the Romanian leu, the Polish zloty and the Czech koruna were the only emerging-market currencies to appreciate against the euro in July among 24 peers. That compares with an 8.5 percent slump for the ruble and a 7.5 percent drop for the Colombian peso.