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Hungarian forint declines to six-week low against the euro

The Hungarian forint declined against the euro, touching a six-week low, as concern that the country's budget deficit may delay adoption of the euro pushed investors to sell the currency.

Hungary has the widest budget shortfall in the European Union. Prime Minister Ferenc Gyurcsány's government aims to narrow the gap by raising taxes and cutting subsidies to reduce the shortfall to 3.2% of GDP by 2009 from 10.1% in 2006. To adopt Europe's common currency, countries must curb the budget deficit to 3% of GDP. „The sentiment in the region deteriorated,” said Illés Tóth, a currency and bonds analyst at DZ Bank AG in Budapest. „And Hungary still has short-term risks like the large budget deficit.” Against the euro, the forint traded at 256.54 at 5:41 p.m., from 255.10 late on Tuesday. It may fall to 258 per euro later this week, Tóth said. The forint declined together with other emerging market currencies such as the Romanian leu and the Bulgarian lev. (Bloomberg)