The forint weakened to a record low of 304.75 on Monday’s interbank market before firming back to 302.80/303.10 against the euro at 4:30 p.m., compared to a Monday-morning rate of 300.85/301.00 and a Friday-afternoon rate of 298.90/299.15.
Dealers attribute the forint’s weakening to a decline in confidence in the economies of central and eastern Europe and the zloty’s sharp weakening on Monday. They addded, however, that data published on Monday morning showing Hungary’s industrial output to have declined 1.1pc in 2008, and Prime Minister Ferenc Gyurcsany’s comments to Reuters that Hungary’s 2009 government budget deficit would be 2.7-2.9pc of GDP rather than the previously targeted 2.6pc did not help to improve sentiment with regard to the Hungarian currency.
The dollar commanded 236.60/70 forints on Monday, compared to a Friday-afternoon rate of 232.10/30.
Forint-market O/N interest remained in the vicinity of 9.20pc on Monday, compared to the National Bank of Hungary’s current key-interest rate of 9.50pc. Interest in longer-term expirations remained non-existent on Monday.
Secondary government securities yields rose as the forint weakened, with low turnover causing large jumps in the price. The benchmark yield on the three-year bond was at 12.00pc, while that on the five-year bond was at 11.35pc and that on the ten-year bond was at 10.30pc.