Bloomberg News

Forint Declines on Report Hungary Faces EU Legal Case on Tax

September 05, 2012

The forint weakened after Brussels- based news website Bruxinfo said the European Commission may start a legal case against Hungary because of the country’s financial transaction tax.

Hungary’s currency depreciated 0.3 percent to 285.27 per euro by 4:19 p.m. in Budapest. Yields on the government’s benchmark 10-year bonds were little changed at 7.405 percent.

The tax, which also applies to transactions at the central bank, is complicating Hungary’s negotiations on an International Monetary Fund credit line. Hungary may have to look for new sources to replace revenue from the central bank if the IMF objects to the levy, Antal Rogan, head of the ruling party’s lawmakers, told Magyar Nemzet in an interview published today.

The forint’s slide was “definitely” caused by the report about the infringement procedure, Peter Karsai, a Commerzbank AG trader in Budapest, wrote in comments sent by e-mail.

The European Union’s executive arm may start the so-called infringement procedure on Sept. 27, Bruxinfo said on its website today, citing unnamed EU officials.

Hungary will probably reach an aid agreement “in the autumn,” Premier Viktor Orban told foreign correspondents in his office in Budapest today. The government is working on its responses to IMF and EU policy proposals following a week of negotiations in July, Orban said.

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

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net


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