Hungarian Forint Falls Versus Euro After Main Rate Kept at 8.5%

By Ewa Krukowska

Oct. 20 (Bloomberg) -- The Hungarian forint fell against the euro after the country's central bank kept its main interest rate at 8.5 percent.

The forint declined to 268.56 versus the euro at 2:06 p.m. in Budapest, from 267.54 at the end of last week. Against the dollar, the forint was little changed at 199.82.

The decision by the Magyar Nemzeti Bank in Budapest was predicted by the median forecast of 15 economists surveyed by Bloomberg. The rate is the second-highest in the European Union, after Romania. The currency lost 10 percent in the past month as investors shunned higher-yielding assets on concern the global financial crisis would entrap Hungary's economy.

Hungary last week became the first East European country to borrow from the European Central Bank to help thaw local markets. The emergency 5 billion-euro ($6.7 billion) financing will only be used if ``all hell breaks loose,'' Andras Simor, the head of the central bank, was quoted as saying by the Wall Street Journal today.

To contact the reporter on this story: Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net