The forint dropped for the first time this week against the euro as data showed Hungary’s economy contracted for the first time in more than two years and bets on monetary stimulus for the global economy faded.
The forint depreciated 0.3 percent to 296.3 per euro by 5 p.m. in Budapest, paring its gain this week to 3 percent. OTP Bank Nyrt. (OTP), Hungary’s largest lender, fell 0.2 percent to 3,400 forint.
Gross domestic product in Hungary, the European Union’s most indebted eastern member, fell 0.7 percent in the first quarter from a year earlier, declining for the first time since the last quarter of 2009, after a 1.4 percent expansion in the last three months of 2011, the Budapest-based statistics office said today. Demand for riskier assets fell as Federal Reserve Chairman Ben S. Bernanke damped expectations for monetary stimulus and German exports dropped.
“The Hungarian economy could show a recession of minus 0.5 percent this year, with increased downward risks,” Zoltan Arokszallasi, a Budapest-based economist at Erste Group Bank AG, wrote in an e-mailed report today.
The government’s benchmark 10-year bonds slumped for the first time in three days, lifting yields 9 basis points, or 0.09 percentage point, to 8.475 percent.
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