Forint set for weekly gain on demand for emerging market assets
Hungary's forint is poised to gain versus the euro for a fourth week, its longest winning run in two months, on evidence investor appetite for emerging market assets is improving.
The forint is the top performer of the 70 currencies tracked by Bloomberg, climbing 5% in the past four weeks. Poland's zloty and the Slovakian koruna both rose more than 2% in the same period. Hungary's currency was also buoyed by the efforts of the government and central bank to bring the nation closer to the euro adoption. “International sentiment is extremely strong at the moment,” said Richard Segal, head of research at Cyprus-based Argonaftis Capital Management, which manages around $900 million in emerging markets. “The forint is also being supported by the actions of the government and the central bank.” Against the euro, the forint rose to its highest in four months, trading at 261.74 per euro at 11:10 a.m. in Budapest from 263.07 yesterday, and 265.31 on October 13. It may advance to 260 per euro by the end of the year, Segal said.
Hungary expects to save some Ft 15 billion ($72 million) a year by cutting the size of state bureaucracy, Napi Gazdaság newspaper reported today, citing a draft government document. Prime Minister Ferenc Gyurcsány is raising taxes, boosting regulated energy and drug prices, and cutting state jobs to trim the budget shortfall, the European Union's widest when compared with the size of the economy. The central bank may lift interest rates, already the highest in the EU, by a quarter point to 8% on October 24 to combat rising consumer prices, said nine of 17 economists surveyed by Bloomberg. The EU earlier this month endorsed the government's program to bring the budget shortfall within the bloc's limits by 2009. That would allow euro adoption in 2011. (Bloomberg)
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