Economy Minister: No need to amend budget for forint
There is no need to amend this year's budget in light of the current weakness of the forint, National Economy Minister Mihály Varga told commercial broadcaster HírTV last night. The forint weakened sharply yesterday, after the National Bank of Hungary (MNB) decided on a 15 bp rate cut, disappointing markets that had expected the central bank to further slow the pace of the easing cycle begun about 18 months ago.
Varga had warned hours before the rate decision of the possible risks to the budget of a persistently weak forint, saying the 2014 budget was drafted assuming an exchange rate of HUF 300 or less against the euro.
At that time, he stated that he hoped the MNB Monetary Policy Council would responsibly assess which exchange rate is fiscally feasible for the central budget, i.e. the previously stated HUF 300:€1 high-water mark, as well as good for exports and for borrowers with forex-based loans.
Varga went on to reiterate in the interview that most of the pressure on the forint was “due to external factors and not justified by fundamentals.”
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