Hungary raised its benchmark interest rate to the European Union’s highest on Tuesday in an attempt to shield its currency, the forint, from further losses. The central bank raised its two-week deposit rate to 6.5 per cent, from 6 per cent – an increase of 50 basis points.

The forint fell to its weakest level ever against the euro this month and yields on benchmark government bonds breached 9 per cent after the country was downgraded by Moody’s.

Earlier today, Hungary sold $170m 3-month paper at a yield of 7.32 per cent, up from 6.63 per cent a week ago.

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