Forint Snaps Two-Day Rally as Output Slump Fuels Rate Cut Bets
The forint weakened for the first time in three days as a decline in Hungarian industrial output spurred the outlook for interest rate cuts and after the World Bank cut its global growth forecast.
Hungary’s currency depreciated 0.5 percent to 295.24 per euro by 10:34 a.m. in Budapest, extending this year’s slump to 1.3 percent. Yields on government bonds due in 2023 rose three basis points, or 0.03 percentage point, to 6.27 percent.
Recession-hit Hungary’s industrial production fell 6.9 percent in November from a year earlier, matching preliminary data, the statistics office said today. Demand for riskier assets slid after the Washington-based bank yesterday projected the world economy will expand 2.4 percent this year, down from a June forecast of 3 percent. The bank also lowered projections for emerging markets led by Brazil, India and Mexico.
“The regional wave of selling caused by diminishing risk appetite has hit the forint,” Imre Kerekgyarto and Karoly Bamli, Budapest-based traders at Commerzbank AG, wrote in an e- mail today.
Hungary’s central bank will today publish minutes of its December meeting, where policy makers voted to cut the benchmark rate by 25 basis points to a two-year low of 5.75 percent.
Economic growth and industrial output figures point toward “poor” prospects for 2013, supporting the argument for further rate cuts, Koon Chow and Daniel Hewitt, London-based analysts at Barclays Plc, wrote in a research report e-mailed late yesterday.
To contact the reporter on this story: Andras Gergely in Budapest at email@example.com
To contact the editor responsible for this story: Wojciech Moskwa at firstname.lastname@example.org