Forint drops to a new low

Hungarian forint touched a new two-and-a-half year low against the euro Friday afternoon. It was only 0.7 forint away from its all-time low of 275.2. Other currencies also slumped in the region but the Hungarian currency underperformed them, as usual. The forint/euro rate seems to stabilize in a band of 270-275. The National Bank had a base rate of 12.5 per cent when the currency hit an all-time low in 2003, but this rate is only 6 per cent now. Hence nearly all analysts predict a rate rise in the summer period, but they disagree in the exact timing of it. Some expect an increase by 50 basis points today. VGO