- Decision prompted by increased uncertainty regarding Hungary’s fiscal outlook and economic prospects
- Also placed Hungar BAA1 foreign currency bank deposit ceiling on review on risk of foreign currency deposits freeze
- Hungary’s economy remains vulnerable due to high fx indebtedness of private and public sectors
- Suspension of talks with IMF/EU clouds Hungary’s growth prospects by exerting pressure on currency, funding costs
- Hungary’s ratings to focus on willingness of govt to come up with coherent reform agenda
- One notch downgrade for Hungary likely if fiscal targets in next round of talks with IMF/EU imply less rapid consolidation path
Forint 0.7% weaker at 285.50 vs euro after Moody’s news.
