The forint fell for a third day as Hungary’s central bank cut its benchmark interest rate and on concern global stimulus measures won’t revive economic growth.
Hungary’s currency depreciated 0.4 percent to 285.59 per euro by 4:01 p.m. in Budapest. Yields on the government’s benchmark 10-year bonds rose 10 basis points, or 0.1 percentage point, to 7.355 percent, the highest in almost two weeks on a closing basis, according to generic data compiled by Bloomberg.
The Magyar Nemzeti Bank yesterday reduced the two-week deposit rate by 25 basis points to 6.5 percent, still the highest in the 27-member European Union, to help Hungary emerge from recession. Emerging-market assets declined amid concern global stimulus measures won’t be enough to revive growth.
“The forint weakened versus the euro following the interest-rate decision and also burdened by relatively weak global risk appetite,” Sandor Jobbagy, a Budapest-based analyst at Intesa Sanpaolo SpA’s CIB Bank unit, wrote in a research report today.
The central bank sees inflation at an average 5 percent in 2013, compared with a projection of 3.5 percent issued in June, according to its Inflation Report published today. Gross domestic product will expand 0.7 percent next year versus a projection for a 0.8 percent expansion published in June, the bank said. The government sees 1.6 percent growth.
The central bank’s inflation target is 3 percent.
Hungary’s monetary easing disregarding faster inflation is “not good news for the forint” amid a European crisis, Carolin Hecht, a Frankfurt-based strategist at Commerzbank AG, wrote in an e-mailed note today.
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