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PM asks for examination of “out of the ordinary” tools to defend forint

Hungarian Prime Minister Ferenc Gyurcsány has asked the central bank governor and the finance minister to examine the possibility of defending the forint with out of the ordinary tools, if necessary, government spokesman Dávid Daróczi told MTI.

Gyurcsány also asked the experts to weigh the advantages of using such tools against their price, Daróczi said.

Gyurcsány told foreign journalists earlier in the day that he had asked the central bank governor and the finance minister to explore “unconventional” methods of intervention to protect the forint, without revealing any further details.

Gyurcsány made the statement responding to a journalist who asked whether Hungary might plan similar steps as those taken by the Polish government to prop up the zloty, Daróczi told MTI.

The Polish prime minister on Tuesday announced the government would start selling euros from European Union funding to support the zloty if the PLN/EUR rate reaches 5.

Gyurcsány said in his answer that Poland handles its money from the EU differently than Hungary, Daróczi said. In Poland, a separate agency handles money from the EU. In Hungary, money that arrives from Brussels is put into the National Bank of Hungary's foreign reserves and the central bank is responsible for their use. The EU money in the bank's reserves at any given time is just €1 billion - €2 billion, a fraction of the value of options contracts on the forex market. (MTI – Econews)