Hungary Yields Rise Toward 2-Month High as Trade Surplus Shrinks

Hungary’s 10-year yields approached the highest level in two months as the trade surplus shrank to the smallest in 2 1/2 years, adding to signs the country is struggling to emerge from recession.

The yields rose four basis points, or 0.04 percentage point, to 6.525 percent, within one basis point of the highest since Dec. 10. The forint gained 0.1 percent to 292.55 per euro by 11:27 a.m. in Budapest, declining less than 0.1 percent this week.

The surplus narrowed to 192.3 million euros ($256 million), the lowest since July 2010, according to data from the central statistics office. That compared with the 350 million euros median estimate of 10 analysts surveyed by Bloomberg. Industrial production fell the most in the fourth quarter of 2012 since the peak of the financial crisis in early 2009 as vehicle output reversed expansion, the statistics office said yesterday.

“Both exports and imports ran out of steam” Zsolt Kondrat, a Budapest-based analyst at Bayerische Landesbank’s MKB unit, wrote in an e-mailed report today. “This is not such a big surprise after yesterday’s industrial figures showed a near collapse in December and it is a reflection of the deteriorating external economic environment in the fourth quarter.”

The weaker-than-expected trade figures may push the forint toward weakening, Zoltan Arokszallasi, an analyst at Erste Group Bank AG, wrote in an e-mailed report today.

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