Hungary’s Economy Ministry blamed Nouriel Roubini for the forint’s weakening to a seven-month low against the euro, saying Minister Gyorgy Matolcsy’s comments on the currency didn’t cause the depreciation.
The ministry cited a recommendation last week by Roubini, co-founder of Roubini Global Economics LLC, to sell the forint in the absence of an International Monetary Fund backstop, according to an e-mailed statement.
The forint declined as much as 0.9 percent against the euro this week to the lowest since June 12 and traded 0.3 percent weaker at 296.78 per the single European currency at 1:41 p.m. in Budapest.
The forint has dropped 2.5 percent since Matolcsy wrote in his weekly column in Heti Valasz newspaper on Jan. 10 that Hungary should reject “traditional” economic models including policies that kept the forint strong to fight inflation. Phone calls to the press department at Roubini Global Economics in London weren’t answered.
“It has become clear that the forint hasn’t been weakening since the middle of last week because of the article by the minister,” the ministry wrote in a statement. “Instead — as it’s so typical of speculators — they just looked for an excuse behind which they can hide their attack.”
The forint started weakening on Jan. 10, two days after Roubini published the note, because investors spent Jan. 9 “in preparation” for the attack, the ministry said.
A single strategy recommendation such as Roubini’s rarely moves markets as much as the forint has slid, Peter Attard Montalto, a London-based emerging-markets economist at Nomura International Plc, wrote in an e-mailed this week.
Matolcsy has been named a potential successor to central bank President Andras Simor, whose term ends in March, according to media reports including the Index news website.
Hungary’s central bank, which cut interest rates for five consecutive months through December, should “bravely use unorthodox tools” to support economic growth, Matolcsy said in an interview with Budapest-based HirTV last month. The country’s inflation rate stood at 5.2 percent in November, the highest among the 27 countries in the European Union.
“Insights into future policy are much more likely to have a dramatic impact, especially when concerning central bank currency policy and related issues of credibility,” Nomura’s Montalto wrote.
The forint may weaken “well above” 300 per euro if Matolcsy is appointed central bank president, Felix Herrmann, a Frankfurt-based analyst at DZ Bank AG, wrote in a report. The yield on Hungary’s 10-year bonds fell less than one basis point, or 0.01 percentage point, to 6.27 percent this week.
The forint weakened to a record low of 324.24 per euro in January 2012 after the nation lost its investment-grade credit rating and Hungary clashed with the International Monetary Fund over the conditions for an aid package.
While IMF talks remain deadlocked, the currency has benefited from the government’s efforts to cut the budget deficit and bond buying by central banks in the euro region and the U.S., which fueled appetite for riskier emerging market assets.
The forint appreciated 8.1 percent per euro and 10 percent to the dollar last year, the biggest gains among more than 100 currencies tracked by Bloomberg after the Polish zloty.
Central bank chief Simor, who has urged the bank to act “much more firmly” against inflation, has been outvoted along with his two deputies on rate cuts by the four non-executive members appointed by Prime Minister Viktor Orban’s lawmakers.
“Markets have actually become less sensitive to an IMF- backed financing package for Hungary,” Nicholas Spiro, managing director of Spiro Sovereign Strategy in London, said in comments e-mailed to Bloomberg. Investors “are more concerned about the further politicization of monetary policy once governor Simor’s term expires,” he added.
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