Forint Advances Most in Week as Varga Calls for Stronger Range
The forint gained the most in a week after the minister in charge of aid talks with the International Monetary Fund said the currency should be stabilized in a stronger range, according to HirTV.
The forint appreciated as much as 1.1 percent and traded 0.7 percent higher at 293.1 per euro by 4 p.m. in Budapest. Yields on the government’s bonds due in 2023 fell six basis points, or 0.06 percentage points, to 6.236 percent.
The currency’s exchange rate should be stable at 275 to 285 per euro and weakening it beyond that rate is “dangerous,” Minister Mihaly Varga was reported as saying by the commercial television station. His comments amounted to “verbal intervention” to support the forint, Zoltan Arokszallasi, an analyst at Erste Group Bank AG, wrote in a research report today.
“Today’s forint rally was basically thanks to chief IMF negotiator Mihaly Varga’s comments in the TV interview,” Arokszallasi wrote.
The forint dropped 2.1 percent in the two days through Jan. 11 after Economy Minister Gyorgy Matolcsy wrote in his weekly column in Heti Valasz newspaper on Jan. 10 that Hungary should reject “traditional” economic models including policies that kept the forint strong to fight inflation.
“It’s not surprising that last week’s comments envisioning a weaker forint from the economy minister had to be followed sooner or later by government views to help tone it down,” Imre Kerekgyarto and Karoly Bamli, Budapest-based currency traders at Commerzbank AG, wrote in an e-mail today.
The Swiss franc’s drop against the euro, which helps Hungarian foreign-currency borrowers, also supported the forint today, the Commerzbank traders said.
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