Hungarian Forint Snaps Four-Day Rally on Global Growth Concern
The forint weakened for the first time in a week as a cut in the Federal Reserve’s U.S. growth estimate deepened concern the global economy is slowing.
Hungary’s currency depreciated 0.3 percent to 287.27 per euro by 10:04 a.m. in Budapest, after strengthening to a six- week high yesterday. Hungary’s benchmark five-year bonds weakened, lifting yields three basis points, or 0.03 percentage point, to 8.003 percent.
Federal Reserve officials reduced their estimates for 2012 growth after last month’s slowdown in hiring and see little progress on unemployment during the rest of the year, according to projections released yesterday. The Fed will expand its Operation Twist program to extend the maturities of assets on its balance sheet and said it stands ready to take further action against unemployment.
Currency markets in central Europe “may be somewhat disappointed” by the Fed statements, Andras Oszlay, a Budapest- based analyst at DZ Bank AG, wrote in a research report.
Hungary’s government has submitted an amendment to a disputed central bank law, which should pave the way to the start of talks on an International Monetary Fund-led aid deal, Mihaly Varga, the minister in charge of aid talks, said in Budapest today.
“The local news flow remains favorable but it didn’t manage to give the forint another boost,” Levente Blaho and Adam Keszeg, analysts at Raiffeisen Bank International AG (RBI), wrote in a research report today.
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