Hungary's forint fell and the cost of insuring its debt hit six-week highs on Friday after comments from its prime minister appeared to pose another hurdle to an aid deal, but emerging stocks rose after weaker-than-expected Chinese GDP made fiscal stimulus more likely.
Hungary's Viktor Orban said on Friday that political conditions for aid talks were “inconceivable and unacceptable”, risking further delays to a multibillion euro financial backstop that central Europe's most indebted country needs to avoid a financial crisis.
The country remains at loggerheads with Europe over central bank and other legislation, but its lenders want that dispute resolved before reaching an aid deal.
“So far the Hungarian government has tried to keep up positive momentum for the IMF/EU talks, but this kind of talk will weigh on the forint,” said Carolin Hecht, emerging markets strategist at Commerzbank in Frankfurt.
“If they don't get a deal done the euro/HUF above 300 will be the new normal.”