Hungarian Currency Is Devalued 9 Percent
BUDAPEST, Hungary (AP) _ The Hungarian government on Sunday devalued its currency, the forint, by 9 percent against a basket of currencies that includes the U.S. dollar.
The new exchange rates will take effect Monday. On Friday, 109.63 forints bought $1, according to the National Bank.
Announcement of the forint’s devaluation followed a week of turmoil on foreign exchange markets that saw the dollar hit record lows against major currencies like the German mark and Japanese yen.
``We need to alter the existing economic situation because the country is drifting,″ Prime Minister Gyula Horn told reporters after Sunday’s cabinet session. Hungary’s economy is plagued by deficits of its budget and current account and a multibillion-dollar foreign debt.
Going forward, Finance Minister Lajos Bokros announced a new foreign exchange policy that provides for a monthly devaluation of up to 1.9 percent starting April 1 and a monthly 1.3 percent starting June 1.
Also, he announced an 8 percent surcharge on all imports running from March 20 through mid-1997 and said the government will cap wage increases and abolish family allowances, except for low-income people, in an effort to limit consumption.