The Hungarian forint’s foreign exchange rate rose to the highest in four weeks for the biggest gains worldwide after Prime Minister Viktor Orban said he would compromise with the EU over disputed laws to revive talks on a bailout.
Hungary’s currency appreciated as much as 1 percent and traded 0.9 percent stronger at 302.25 per euro at 11:56 a.m. in Budapest, the highest intraday level since Dec. 21 and compared with a record low of 324.24 reached on Jan. 5. The forint had the biggest one-day rally among more than 170 currencies tracked by Bloomberg. The government’s benchmark 10-year bonds climbed, cutting the yield 28 basis points, or 0.28 percentage point, to 9.303 percent.
Orban is trying to revive negotiations with the EU and the International Monetary Fund after discussions broke down in December over his refusal to change a central bank law that the institutions said may weaken monetary-policy independence. The EU also threatened a lawsuit against Hungary for encroaching on the central bank’s independence and political meddling with the judiciary and the data-protection authority.
“Markets currently start pricing out a worst case scenario for Hungary as Orban shows willingness to cooperate,” Felix Herrmann, a Frankfurt-based economist at DZ Bank AG, wrote in a research report today.
Hungary sold a planned 45 billion forint ($192 million) in one-year Treasury bills at an auction today at an average yield of 8.19 percent, compared with 9.96 percent at the last sale of that maturity two weeks ago, according to auction results from the Debt Management Agency. That marked the biggest drop in borrowing costs between two auctions of that maturity since December 2008.