BUDAPEST: Hungary will take steps if its forint currency weakens from the 285 versus the euro level used in this year's budget in a "lasting and significant" way, Economy Minister Mihaly Varga said on Monday.
He did not elaborate on potential tools the government might use but said current weakness and volatility in the forint which hit a nine-month low of around 303 to the euro earlier on Monday was likely to be temporary.
Hungary's government, households and businesses have heavy foreign currency debts, chiefly in Swiss francs and euros, payments on which have ballooned as the forint has weakened during the recent economic crisis.
"The kind of exposure that the country has today does not make the government interested in a lasting weakness of the forint," Varga told journalists on his first day in office.
"I consider the exchange rate of (EUR-HUF) 285 important because the government takes steps and will take steps in the future that makes achieving that level realistic."
The forint fell on Monday on concerns about a parliamentary vote on changes to the constitution and steps by the new central bank governor to demote two of his vice governors, dealers said.
It firmed to around 301.50 after Varga's comments. Varga said he had already sat down with leaders of the Hungarian Bank
Association to discuss ways to ease the problem for households of foreign currency-denominated debt, but added that he was not planning to use new tools to address the issue.
Varga said the government wanted a harmonious relationship with the banks, on which it has imposed the highest bank tax in the European Union and various other punitive measures since Prime Minister Viktor Orban took power in 2010.
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