Hungary jacks up interest rates to stem financial crisis

Business Materials 23 October 2008 01:52 (UTC +04:00)

Hungary's national bank sharply raised interest rates Wednesday in an emergency bid to defend the country's currency, which has slumped as a result of the global financial crisis, dpa reported.

The bank's policy-making council boosted the key rate to 11.5 per cent from 8.5 per cent at an unscheduled meeting in Budapest, a central bank statement said.

The forint has plunged in recent days as concern about the liquidity of Hungarian banks soured investors on the Central European nation's already ailing economy.

After the central bank move, the Hungarian currency recovered to about 276 forint to the euro from 284 forint earlier in the day.

"The forint remains under strong speculative pressure," Prime Minister Ferenc Gyurcsany said.

The national bank's move was aimed at bolstering the forint and "making business more expensive for speculators," he told reporters after the rate hike.