Orban Helps Matolcsy Bid With Hungary MNB Delay, RBS Says
Hungary Premier Viktor Orban picking the new central bank chief the day before the incumbent’s term ends gives Economy Minister Gyorgy Matolcsy time to endear himself to investors, Royal Bank of Scotland Plc. said.
Orban may announce his decision on March 1, the last working day before Andras Simor’s six-year term ends at the helm of the Magyar Nemzeti Bank, London-based RBS strategists including Phoenix Kalen said in an e-mailed report today. Orban was earlier said to unveil his choice at a three-day ruling- party meeting that starts Feb. 5, the Index news website reported Jan. 17.
The central bank should pursue a “conservative” policy course, avoid “surprises,” and “absolutely not” engage in budget financing, Matolcsy said in an interview with the Wall Street Journal on Jan. 30. RBS said the minister “essentially backtracked” on comments made in December, when he called for the “brave” use of “unorthodox” monetary-policy tools.
“Orban’s decision to wait until the last moment to nominate the candidate suggests that the nominee is unlikely to be market friendly, in our view,” RBS said. “We believe this increases the likelihood of a Matolcsy appointment.”
The forint, which fell to an eight-month low against the euro after Matolcsy’s December comment, rallied 0.9 percent against the euro since his interview this week. The currency traded at 292.36 per euro by 11:54 a.m. in Budapest. Standard Bank (SBK) Group Ltd. yesterday said the interview showed “Matolcsy wants the job.”
The timing of Orban’s announcement may also help Hungary sell a Eurobond “ahead of any adverse market reaction to an unfavorably perceived candidate,” RBS said.
Hungary plans to sell bonds on the international market by the beginning of this month as efforts to obtain aid from the International Monetary Fund are coming to an end, Orban said on Jan. 30 in Brussels. Debt Management Agency officials are currently meeting investors in the U.S. and in Europe ahead of the sale.
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