Forint’s Weekly Advance Tops Emerging Markets: Budapest Mover

The forint strengthened, capping the best weekly advance among emerging-market currencies, and bond yields plunged on signs Hungary’s economy is rebounding from recession.

The forint gained 1.9 percent in the past five days, the biggest appreciation among the 24 currencies from developing economies tracked by Bloomberg. It advanced as much as 0.8 percent today and traded 0.4 percent stronger at 291.2 per euro by 5:37 p.m. in Budapest. Yields on 10-year notes fell 34 basis points, or 0.34 percentage point, to 5.75 percent, the lowest in more than a week, according to data compiled by Bloomberg.

Hungary’s industrial output expanded for the first time this year in April, data from the statistics office in Budapest showed today, matching its preliminary estimate. Hungary’s economic growth in 2013 may surpass the government’s 0.7 percent forecast, Prime Minister Viktor Orban said in an MR1 radio interview today. U.S. reports on retail sales and jobless claims beat estimates yesterday while industrial production in the world’s biggest economy was unchanged in May.

“Investor sentiment mostly improved on the better-than-expected U.S. macroeconomic data,” Zoltan Arokszallasi, a Budapest-based analyst at Erste Group Bank AG, wrote in a research report today.

The forint weakened to a six-week low on June 11 and Hungary’s 10-year bond yields rose to a two-month high as concern the U.S. Federal Reserve may scale back its monthly bond purchases reduced investor appetite for riskier assets.

“Sentiment will probably remain volatile because of the uncertainties over the continued quantitative easing policy from the Fed,” Arokszallasi wrote.

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