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MNB euro sales among tools to stabilize forint

The Hungarian Central Bank (MNB) will use several tools to stabilize the forint, and is ready to utilize all monetary tools available, MNB governor András Simor told in an interview with the state radio channel MR1-Kossuth.

The tools include making its recently established swap facilities more attractive to banks and selling euro for forint on the market, Simor said.

The MNB will start selling the EU funds received for forint on the market, he said, confirming a late Sunday statement of the MNB monetary council.

The interest rate is part of the set of monetary tools, he said in response to a question whether an interest rate rise was included among the options considered.

The devaluation the forint suffered last week has become excessive compared to the Hungary economy's fundamentals, Simor said. The forint has recently weakened together other currencies of the region, in three days last week, however, it weakened separate from the regional trend, he said.

The MNB cannot fight regional trends but should prevent the forint to separate itself, Mr Simor said.

Simor was speaking on the phone from Basel where he attends a regular meeting of the Bank of International Settlements. He said the meeting will discuss market developments and it will also offer an opportunity for discussions with other East-European central bankers.

The Monetary Council of the MNB held two extraordinary meetings over the weekend, on March 6 and 8, and in a statement issued Sunday evening it said it will do everything in its power to bring financial market processes back in line with prospects of the real economy. (MTI – Econews)