Bloomberg News

Forint Strengthens After Minister Varga Calls for Appreciation

January 21, 2013

The forint gained after a government minister said he supported appreciation and as an index of Hungary’s economic-sentiment improved to a nine-month high.

Hungary’s currency appreciated as much as 0.4 percent and traded 0.1 percent stronger at 292.9 per euro by 3:50 p.m. in Budapest. Yields on the government’s benchmark 10-year bonds were little changed at 6.33 percent.

The government targets a forint rate of 285 per euro as that level helps both exporters and foreign-currency debtors, Mihaly Varga, the minister in charge of international aid talks, said in an interview with ATV yesterday. The budget for 2013 was based on that exchange rate, which remains the “right and realistic target,” Varga said.

“The minister confirmed the market’s view that the government can’t aim to unnecessarily weaken the forint as that would narrow its own room for maneuver,” Gergely Toth, an analyst at Buda-Cash Brokerhaz Zrt., wrote in a research report today. Varga’s comments may boost the forint this week, Toth said.

The forint slumped 2 percent after Economy Minister Gyorgy Matolcsy wrote on Jan. 10 that he opposed strengthening the currency to fight inflation, in his weekly column in Heti Valasz newspaper. The currency rebounded 0.9 percent last week after Varga said Jan. 16 that the forint should be stable between 275 to 285 per euro.

The country’s economic-sentiment index was at minus 19.6, compared with minus 21.2 in December, as consumers became less pessimistic, the GKI research institute in Budapest said in an e-mailed statement.

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

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net


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