Forint Jumps as Hungary Yields Hit 8-Week Low: Budapest Mover

The forint gained the most in more than a week and Hungary’s 10-year bond yields fell to a seven-week low as Lawrence Summers’ exit from the Federal Reserve succession race boosted appetite for riskier assets, reports Bloomberg.

Hungary’s forint appreciated 0.7 percent to 298.61 per euro by 2:31 p.m. in Budapest, the fourth-biggest advance among 24 emerging-market currencies tracked by Bloomberg. Yields on the government’s 10-year forint bonds slid 13 basis points, or 0.13 percentage point, to 6.06 percent, the least since July 25.

Hungarian local-currency bonds returned 59 percent since the Fed cut its main interest rate to as low as zero and shifted its focus to debt purchases on Dec. 16, 2008, the most among 26 sovereign indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. Summers, a former Treasury secretary, would tighten Fed policy more than Janet Yellen, who was his main rival to replace Chairman Ben S. Bernanke, according to a Bloomberg Global Poll last week.

“The forint is rallying because of the general positive mood caused by Summers not running for Fed chairman,” Pal Saaghy, a Budapest-based currency trader at broker Equilor Befektetesi Zrt., said by phone today. “It’s given markets hope that even if they phase out quantitative easing, they’ll do it gradually.”