The forint capped a third week of gains as the government proposed amendments to a central bank law that has blocked bailout talks for seven months.
Hungary’s currency appreciated as much as 0.5 percent and last traded 0.1 percent stronger at 287.7 per euro by 5:18 p.m. in Budapest, taking its weekly advance to 2.2 percent, the biggest jump in the past five days among more than 20 emerging- market currencies tracked by Bloomberg.
The proposed changes to the law on the Magyar Nemzeti Bank will bring it in line with European Union regulations and address concerns raised by the European Central Bank and the International Monetary Fund, according to the draft posted on parliament’s website yesterday. Parliament may approve the bill in two weeks, Mihaly Varga, Hungary’s chief negotiator for international aid, told the MTI state news service on June 20.
“In recent days, appreciation on Hungarian markets was fueled by increasingly positive expectations regarding the start of IMF talks in the near future,” Zoltan Arokszallasi, an analyst at Erste Group Bank AG, and colleagues wrote in a research report today.
Investors should sell the forint against the European common currency as Hungary’s request for the IMF credit line faces more delays, Raiffeisen Bank International AG (RBI) said today. The forint will “gradually” depreciate against the euro in the summer, Adam Keszeg, a Budapest-based analyst at the bank, wrote in a research report today.
Hungary’s economic sentiment index rose in June after the gauge plunged the most since the onset of the global credit crisis in the country in late 2008, data showed today. The index improved to minus 24.5 from minus 24.9 in May, the GKI research institute in Budapest said in an e-mailed statement.
“While tangible steps forward in IMF talks may justify the current euro-forint levels, volatility cannot be ruled out until the market actually witnesses these tangible steps,” Erste’s Arokszallasi wrote.
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