Hungary's Forint Climbs in Week as Oil Fuels ECB Stimulus Wagers

  • Forint pares gain versus euro after Poland downgraded by S&P
  • Oil hurting inflation makes more stimulus likely: Raiffeisen

Hungary’s forint headed for the second-best gain among emerging-market currencies this week amid speculation the country will see increased investment flows if falling crude prompts the European Central Bank to boost stimulus.

The forint traded up as much as 0.4 percent before erasing the advance after Poland had its rating downgraded by Standard & Poor’s. The currency was 0.2 percent weaker at 315.41 per euro as of 6:30 p.m. in Budapest, trimming its weekly advance to 0.5 percent.

Oil trading under $30 a barrel at a 12-year low could threaten the ECB’s plan to bolster the economy by stoking the pace of price growth, according to Raiffeisen Bank International AG. ECB President Mario Draghi has said he expects current measures will be enough to return euro-area inflation to just under 2 percent, though officials stand ready to boost stimulus if needed.

“We could benefit from the extra low oil prices as the increased risks to inflation expectations could buoy inflows,” Gergely Palffy, an economist at Raiffeisen’s Hungarian unit, said by phone on Friday. The forint may advance to 310 by the end of the first quarter, he said.

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