The forint fell to the weakest against the euro for more than two months on concern the global economy will slow and Hungary will fail to meet conditions to start talks on an international bailout agreement.
Hungary’s currency depreciated 1 percent to 298.01 by 4:35 p.m. in Budapest, the lowest on a closing basis since Jan. 25.
Investors should sell the forint against the euro because of Hungary’s “slow” progress toward starting talks on a credit line from the International Monetary Fund and vulnerability to falling global appetite for risk, Credit Agricole SA (ACA) said today. U.S. stocks fell after China’s imports missed economists’ forecasts.
“Should risk aversion deteriorate further, the forint would remain vulnerable and would be hit hard,” Guillaume Tresca, a Paris-based strategist at Credit Agricole, wrote in an e-mailed report today. Hungary’s government used its “silver bullet” asking for the IMF’s help, and “slow progress in talks could prove to markets that, ultimately, Hungary is not so eager to negotiate.”
Hungarian Prime Minister Viktor Orban has failed to meet EU conditions to start talks on a bailout almost five months after requesting aid. While Hungary has amended laws governing the judiciary and the data-protecton authority and proposed changes to central bank regulations to allay European Commission concerns over their independence, the proposals probably failed to meet European Union conditions to start aid talks, Mujtaba Rahman, a New York-based analyst at Eurasia Group, said in a note to clients today.
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