Forint Drops as Hungary Yields Plunge on Central Bank Meeting
The forint slid for a second day and Hungary’s 10-year bond yields fell to a three-month low as the central bank prepared to unveil measures to boost the economy.
Hungary’s currency depreciated after the Magyar Nemzeti Bank announced yesterday that President Gyorgy Matolcsy will hold a briefing at 11 a.m. in Budapest today. The press office didn’t specify the topic, saying it will be followed by presentations from central bank staff on “options to boost lending.” Policy makers may copy tools used by the European Central Bank, the Magyar Nemzet newspaper reported, without saying where it got the information. The measures may include cheap loans for commercial banks, news website Origo said, also without citing anyone.
“The extraordinary measures will be unlikely to strengthen the forint,” Levente Blaho and Adam Keszeg, Budapest-based analysts at Raiffeisen Bank International AG (RBI), wrote in a research report today. “It would have been better not to give the impression that the bank is in such a hurry to act.”
The forint dropped 0.2 percent to 303.06 per euro by 9:34 a.m. in Budapest. Yields on the government’s benchmark 10-year bonds fell two basis points, or 0.02 percentage point, to 6.09 percent, the lowest since Jan. 3.
The currency has gained 1 percent since policy makers urged caution in monetary easing when they cut the benchmark rate by 25 basis points to a record low 5 percent on March 26, in the first meeting headed by Matolcsy.
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