Hungarian forint gains to 6-month high as inflation accelerates

The Hungarian forint gained to a six month high against the euro as inflation, the highest in the European Union, quickened to a two-year high in October.

The annual rate was 6.3%, the highest since October 2004, compared with 5.9% in September. The forint has gained 3% in the past six months as Hungary's inflation rate has almost tripled, exerting pressure on the central bank to raise rates for a sixth time since June. “The inflation figures came out higher,” said Patrick Bengzon, an emerging markets strategist at Jyske Bank A/S in Silkeborg. “As the market is in the buying mood, the Hungarian forint will move higher.” The forint advanced to 259 per euro at 9:54 a.m. in Budapest, from 259.70 late yesterday. The currency will probably reach 256 by the end of the week, Bengzon said. Hungary's central bank, which last month lifted the benchmark interest rate to 8%, the highest level in the EU, may increase borrowing costs by another quarter point this month, according to four out of nine economists in a Bloomberg News survey. Five economists expect no change in rates. (Bloomberg)

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