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Hungary's credit ratings put on review for downgrade by Moody's

Hungary had its credit ratings placed on review for possible downgrade by Moody's Investors Service because of a risk of currency speculation after the government was weakened by protests against the government. Moody's rates the country's long-term foreign- and local currency debt at A1, four steps from the top. The review will focus on assessing the government's willingness and ability to cut spending, the company said in an e-mailed statement on Friday. Hungarian protesters demanding the resignation of Prime Minister Ferenc Gyurcsány clashed with riot police in downtown Budapest three nights this week. The public outcry may make it difficult for the government to implement its austerity measures, according to Moody's. “The current prime minister, although committed to carrying out such reform, has been weakened by current events,” Moody's said in its statement. “If he is replaced, it isn't clear that a new prime minister will have either the willingness or the ability to carry out such a program.” Gyurcsány three months ago announced measures including higher taxes and increased prices for medicines, natural gas and electricity that are aimed at reducing the budget deficit. The shortfall is Europe's largest compared with the size of the economy. The government faces local elections on October 1. A weaker government position and uncertainty about the implementation of the austerity measures may trigger speculation against the forint, Moody's said. Hungary's currency posted a 2.5% weekly drop against the euro this week. It fell for a fifth straight day on Friday, to 277.28 per euro. (Bloomberg)