Forint Has First Weekly Decline This Year on Greece, Malev Risk
The forint dropped for a third day, capping the first weekly loss this year after European finance ministers held back a rescue package for Greece and Hungary faced fallout from the demise of its national airline.
The currency of Hungary, the European Union’s most indebted eastern member, declined 0.8 percent to 293.31 by 5 p.m. in Budapest, dropping 1 percent in the week. The benchmark BUX stock index plunged 2.2 percent to 19,026.82.
Greek Finance Minister Evangelos Venizelos said a parliamentary vote set to begin this weekend amounted to a ballot on euro membership as the country faced further delays to the aid package. Hungary, which has been struggling since the end of last year to start talks on a bailout of its own, is facing a potential compensation payment to Budapest Airport after the bankruptcy of state-owned carrier Malev Zrt. last week.
The potential Malev payment “may blow a big hole in the budget,” Jozsef Szabo, who helps manage $7 billion at Aberdeen Asset Management in Budapest, said in a telephone interview today, adding that Hungary was “especially vulnerable” to heightened risk aversion in international markets.
The forint strengthened 9 percent through the end of last week since Jan. 5 after Prime Minister Viktor Orban said he was ready to discuss the conditions needed to obtain a “quick” deal on aid with the International Monetary Fund and the EU, following a dispute over legislation.
The government may be forced to pay “several hundred billion forint” to Budapest Airport in compensation as it moves to wind up carrier Malev Zrt., the Development Ministry said this week. The ruling Fidesz party doesn’t see any solution that would help create a national airline, news service MTI said today, citing Janos Lazar, head of Fidesz’s parliamentary group.
“The discussions about the extent of the airport compensation aren’t helping the forint,” Jozsef Miro, a Budapest-based analyst at Erste Group Bank AG, and colleagues wrote in a research report today. “The sums being thrown about are astoundingly large.”
To contact the reporter on this story: Andras Gergely in Budapest at email@example.com
To contact the editor responsible for this story: Gavin Serkin at firstname.lastname@example.org