Forint Gains as Cabinet to Curb Loan Plan Effect: Budapest Mover

The forint gained for the first time in four days after a government official said plans to phase out foreign-currency mortgages must not hurt Hungary’s currency.

The forint strengthened 0.2 percent to 296.30 per euro by 10:17 a.m. in Budapest, paring its weekly drop to 0.2 percent. Yields on the government’s benchmark 10-year forint bonds fell six basis points, or 0.06 percentage point, to 6.06 percent.

Hungary will consult banks on plans to phase out foreign-currency mortgages, a process that will probably take years, Gabor Orban, a state secretary at the Economy Ministry, said in an interview yesterday. Weakening the forint “isn’t part, or wouldn’t be a welcome consequence” of the program, he said. The forint and Hungarian banking stocks fell last week when the government announced its intention to help borrowers.

“Based on the latest information, the banks may avoid the worst-case scenario, which in addition would be a boon for the forint,” Akos Kuti, Budapest-based head of research at broker Equilor Befektetesi Zrt., said in an e-mailed note dated today.

The forint weakened 12 percent in 2011 when the government allowed the early repayment of foreign-currency mortgages at below-market rates. Any comparison between the current plans and the 2011 repayment would be “a big stretch,” the ministry official said yesterday.

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