Forint Gains to Two-Week High on Manufacturing: Budapest MoverAndras Gergely
Hungary’s forint climbed to the strongest level in two weeks and government bond yields dropped as data showed the country’s manufacturing expansion accelerated in March.
The currency appreciated for a third day after a purchasing managers’ index rose to 55.7 from 54.1 in February, according to an e-mailed statement from MLBKT, the company that compiles the data. Hungary has struggled to exit a second recession in four years, caused by the slowdown in the euro area, its main trading partner, and Prime Minister Viktor Orban’s measures to cut the biggest debt burden in the east of the European Union.
“The PMI data may provide some optimism for the forint,” Imre Kerekgyarto and Karoly Bamli, Budapest-based traders at Commerzbank AG, wrote by e-mail today.
The forint gained 0.6 percent to 302.04 per euro by 4:17 p.m. in Budapest. Yields on the government’s benchmark 10-year bonds fell seven basis points, or 0.07 percentage point, to 6.287 percent, the lowest since March 1.
The forint has gained 1.3 percent since Hungary’s central bank urged caution in monetary easing after cutting the benchmark rate by 25 basis points to a record low 5 percent on March 26.
While the government “clearly prefers” lower rates, the central bank’s easing may be approaching a point which causes a selloff in some bonds, the Wall Street Journal reported today, citing an interview with Economy Minister Mihaly Varga. The government wants a stable forint and opposes weakening the currency to boost exports, Varga said, according to the report.