The Hungarian forint fell along with other emerging market currencies after a selloff in global equities led investors to withdraw from riskier assets.
The forint, the Polish zloty, Turkish lira and the Romanian leu declined today against the euro and the dollar. Eight out of 14 traders, strategists and investors surveyed by Bloomberg News on March 2 from Budapest to London advised selling the forint against the euro this week. „We have had a bit of a selloff of the Hungarian forint,” said Carlin Doyle, an emerging-market strategist with State Street Global Markets in London. „We have seen some softness in emerging markets currencies, but I would say don't panic yet.” Against the euro, the forint traded at 255.09 at 2 p.m. in Budapest, from 253.60 on March 2. It may reach 265 per euro still this week, Doyle said.
European stocks extended last week's slump amid concern a four-year rally in equity markets is at risk from slowing US economic growth and a stronger yen. The yield on the Hungarian 6% bond due October 2011 rose 3 basis points to 7.48% in Budapest. The spread over the equivalent maturity German bound widened to 364 basis points. In other trading, the Polish zloty fell to 3.91 per euro in Warsaw from 3.89 on March 2. The yield on the Polish 5.25% benchmark government bond due October 2017 advanced to 5.22% in Warsaw. The gap in yield, or spread, over the similar maturity German bund rose to 133 basis points. „It's hard to say how long this unrest will continue, but we don't think it will be over today, and we recommend reducing risk in emerging markets,” Danske Bank analysts wrote in an e-mailed note. „With the yen possibly strengthening ahead, carry-trade unwinding may well continue, and so we don't yet see this as a buying opportunity.” (Bloomberg)