Hungarian Forint Weakens As Central Bank Cuts Benchmark Rate To Record Low

The Hungarian forint weakened against the dollar Tuesday after the country's central bank lowered its benchmark interest rate to a record low. The currency , which has risen nearly 5% against the dollar so far this year amid a broader rally in developing markets, briefly tumbled to 277.52 to the dollar after the cut, compared with 276.73 late Monday in New York. It has since pared its decline to trade flat on the day. The central bank lowered its benchmark, the overnight lending rate, to 1.05%, from 1.20% previously. The central bank had already cut the rate once this year, at its previous meeting in March, when it also reduced its overnight deposit rate to an all-time low of minus 0.05%. By lower key interest rates, Hungary, Turkey and a host of other developing market economies are trying to ward off excessive currency strength as speculators search for return in a low interest rate environment.