The Hungarian forint’s foreign exchange rate had its biggest five day gain against the euro since April 2009 on speculation Prime Minister Viktor Orban will take steps to restart talks on an international bailout.
The forint appreciated as much as 1.4 percent and traded 1.3 percent higher at 299.85 by 4:39 p.m. in Budapest, the strongest level on a closing basis since Dec. 6 and set for a 4.3 percent gain since Jan. 16. The cost of insuring against default on Hungary’s debt with credit-default swaps fell to 597 basis points from 610 on Jan. 20 and compared with a record high of 735 basis points on Jan. 5. A basis point is one hundredth of a percentage point.
Orban is trying to revive bailout negotiations with the European Union and the International Monetary Fund after discussions broke down in December over his refusal to change laws that both organizations said may weaken monetary-policy independence. Orban offered to change disputed legislation after the EU threatened a lawsuit against Hungary for encroaching on the central bank’s independence and political meddling with the judiciary and the data-protection authority.
“Positive sentiment towards the forint continues on more supportive comments about Hungary’s prospects of getting an agreement with the IMF,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman, and colleagues wrote in an e-mailed report today.
Investors should buy the forint and sell the Polish zloty, Simon Quijano-Evans, a London-based economist at ING, said in an e-mailed report today, citing the planned moves by Orban on the central bank law. The forint appreciated 0.5 percent to 70.06 per zloty.