Hungary’s credit rating cut, forint drops 1.2 percent

Story link: Hungary’s credit rating cut, forint drops 1.2 percent

The US dollar weakened for the second day in a row on Thursday as the US Treasury said that net inflows in April were a mere $46.7 billion in April, well below March inflows of $70.4 billion and the April forecast of $60 billion and not nearly enough to cover the $63.4 billion April trade deficit. At least some of the decline was said to represent less interest in Treasury bonds from oil exporters in the Middle East. Industrial production numbers were also weak, contributing to the declines. Even the prospect that interest rates will likely rise in both June and August did not help the US currency.

While the US dollar did add 0.4 percent to C$1.1175 against the Canadian dollar, it dropped 0.2 percent to $1.2615 versus the euro and fell 0.3 percent to $1.8481 in relation to sterling. The greenback was about even against the Japanese yen at ¥115.06.

In Hungary, the forint lost 1.2 percent to a record low Ft273.79 versus the euro. The decline came after Standard & Poor’s cut Hungary’s credit rating, predicting that the nation’s budget deficit would remain at 6.8 percent of the gross domestic product by 2009, significantly higher than the 3 percent required to join the euro.

The Polish zloty and the Czech koruna were also both lower in relation to the euro as well, with the Polish currency dropping 0.7 percent to 4.067 zlotys to the euro. The koruna declined by 0.3 percent to Kc28.393.

The Swiss franc dropped 0.2 percent to SFr1.5541 against the euro after a quarter-point hike in interest rates by the Swiss National Bank, to 1.5 percent.