THE European Central Bank said it would lend as much as 5 billion euros (US$6.75 billion) to the Hungarian central bank to help unfreeze the local credit market and avoid a further devaluation of the country's assets.
Hungary, which isn't part of the 15-nation euro region, is the first east European country to receive ECB support. The central bank would use the loan to supply euros to local lenders through currency swap transactions, Bloomberg News reported.
Hungarian stocks, bonds and the forint have been battered as foreign currency borrowing by local businesses and consumers, along with a slower growth and wider budget deficit than elsewhere in eastern Europe, have made the country a target.
The help from the International Monetary Fund and the ECB has helped restore some confidence, investors said. The forint rose as much as 3.8 percent to 261.46 per euro after the ECB announcement.