UK Markets closed

Hungarian government has no exchange rate target - PM Orban's cabinet chief

Hungarian forint and Euro notes are seen in this photo illustration taken in Budapest

BUDAPEST (Reuters) - The Hungarian government has no exchange rate target, Prime Minister Viktor Orban's cabinet chief said on Thursday when he was asked about the forint's weakening to record lows versus the euro.

The forint <EURHUF=D2> eased to a new all-time low of 333.46 to the euro on Wednesday, underperforming other central European currencies. It rebounded to 331.25 on Thursday in volatile trade ahead of a policy meeting of the European Central Bank.

"I don't think the current exchange rate would give reason for any concerns," Gergely Gulyas told a weekly government news conference.

Gulyas said the forint's weakening would lead to increased revenues that would offset losses on the expenditure side.

"We get subsidies from the European Union in euros, so this means more (funds) in forints, while obviously (the weaker forint) can boost inflation," Gulyas said.

"However, I do not think the exchange rate's move has been big enough ... for economic policy makers having to deal with it more extensively than necessary," he added.

He said the weaker forint did not have a significant impact on Hungarians' lives as the government had resolved the issue of foreign currency mortgages, removing the risk stemming from the currency's weakness.

The Hungarian central bank reiterated, in a reply to Reuters' questions, that it had no exchange rate target. It declined to give any further comments.

The bank will assess the inflation outlook at its next rate-setting meeting on Sept. 24, after headline inflation slowed in August to 3.1% from 3.3% in July and 3.9% in May.

At its August meeting, the central bank kept its policy rate unchanged but it said in its statement that downside risks had strengthened regarding lasting inflation trends.

(Reporting by Krisztina Than; Editing by Kevin Liffey and Gareth Jones)