Feb. 1 (Bloomberg) -- The forint rose to the strongest close in more than three months as Hungary’s purchasing manager index improved and Chinese industry gauges rose, increasing the prospect of a recovery in emerging markets.
Hungary’s currency appreciated 1.5 percent to 290.4 per euro, the strongest on a closing basis since Oct. 12. The government’s benchmark 10-year bonds climbed for a second day, cutting yields 17 basis points to 8.877 percent by 4:34 p.m. in Budapest.
Hungary’s purchasing managers’ index rose to 49.8 points in January, near the 50 level dividing expansion from contraction, compared with 48.6 points in the previous month, the Hungarian company MLBKT said in a report today. China’s manufacturing indexes rose in January as the world’s second-biggest economy withstood weaker exports driven by Europe’s debt crisis and a government-induced property slowdown.
“January’s manufacturing PMI data provide some evidence that the slump in industry in emerging Europe’s most open economies is bottoming out,” William Jackson, a London-based emerging-market analyst at Capital Economics, wrote in a research report.
The forint has rallied 9.9 percent for the best gains worldwide since Prime Minister Viktor Orban said on Jan. 5 he was ready to discuss conditions needed to achieve a “quick” deal with the International Monetary Fund and the European Union on a bailout package.
It remains uncertain whether Orban’s government will make the concessions needed to strike a deal with the IMF, Guillaume Tresca, a Paris-based strategist at Credit Agricole CIB, wrote in a research report today.
“Despite the recent improvement on the market front with the forint outperforming its peers, no real major improvement has been made,” Tresca said. “There is need for concrete decisions and actions.”
Hungary will probably finalize this week its formal response to European Union criticism of laws which obstructed talks on a bailout package, Andras Giro-Szasz, the government’s spokesman, said today in an interview with state-run M1 television.
While the Cabinet is ready to yield on several points disputed by the EU, it disagrees with the claim that the limiting of central bankers’ salaries and of the working age of judges is discriminative, Giro-Szasz said.
--Editors: Linda Shen, Alex Nicholson
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