Forint may gain on speculation bank will raise interest rates

The Hungarian forint may gain against the euro on speculation the Hungarian central bank will raise interest rates after the currency fell to a record low. Hungary's central bank may need to raise its benchmark rate again after increasing it last week for the first time in 2 1/2 years because of a weak currency, said central bank spokesman Gábor Missura. “People are looking for higher rates in this risk aversion environment,'' said Olivier Desbarres, a currency strategist in London at Credit Suisse Group, the second-biggest Swiss bank. The forint rose to 279.9 per euro at 2:50 p.m. in Budapest, from 281.5 late on June 23. It reached a record low 282.15 per euro on June 23. The prospect of higher interest rates in the U.S. and Europe is luring investors away from more risky emerging market assets. The Hungarian central bank on June 19 unexpectedly raised the benchmark interest rate by a quarter point to 6.25%. The bank's next meeting is scheduled for July 24. Missura said there will be no emergency meeting in advance. Turkey's central bank yesterday raised its benchmark interest by 2.25% age points, a second increase this month, at an emergency meeting. (Bg)