Bloomberg News

Forint Pares Advances After IMF Denies ‘New Type’ Hungary Talks

November 17, 2011

Nov. 17 (Bloomberg) -- The forint pared gains after the International Monetary Fund said it hasn’t received a request for negotiations on a program for Hungary supported by the Washington-based lender.

The currency appreciated 1.6 percent to 308.57 against the euro at 6:47 p.m. in Budapest after earlier surging by as much as 2.6 percent after the government said it was starting talks with the IMF on a “new type” of cooperation without obtaining a new loan.

An IMF team is in Budapest conducting a regular review, which is “not a negotiating mission,” Iryna Ivaschenko, the lender’s representative to Hungary, said in an e-mail. The Economy Ministry said in an earlier e-mail that the Cabinet is seeking a “new type” of cooperation after the forint plunged to a record low this week and bond yields soared to a two-year high at an auction today.

The Hungarian government spokesman’s office and the ministry didn’t provide further comment on its earlier statement, including what type of cooperation they are seeking, when contacted by Bloomberg.

“Today just shows the extent to which the extent the Hungarian government keeps playing with positive headlines,” Guillaume Salomon, a London-based economist at Societe Generale SA, said by e-mail. “Euro-forint was a great buy at 306.00.”

Standard & Poor’s last week warned it may cut the country’s credit rating to junk this month.

Benchmark 10-year bonds rallied for the first time this week, cutting the yield 45 basis points, or 0.45 percentage point, to 8.346 percent.

--Editors: Linda Shen, Peter Branton

To contact the reporter on this story: Andras Gergely in Budapest at agergely@bloomberg.net

To contact the editor responsible for this story: Stephen Kirkland at skirkland@bloomberg.net


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