Hungary's currency continues to be battered by the global financial crisis even though markets are closed for four days for a national holiday.
Over the past few weeks the forint has lost 25 to 40 percent of its value against the euro and the U.S. dollar and the Budapest Stock Exchange's benchmark BUX reached its lowest point in four years.
The government has turned for help to the International Monetary Fund and the European Union, and the central bank raised its key interest rate by 3 percentage points on Wednesday, to an annual 11.5 percent, in an effort to defend the forint.
While Hungary's markets are closed until Monday because of commemorations of the 1956 anti-Soviet revolution, trading in London was hectic, with the euro moving between 275 and 286 forints.
The government said Wednesday it had agreed with leading banks on relief measures to help Hungarian businesses and households who have debts in foreign currencies.
In the past couple of years, Hungarians increasingly have chosen to sign up for mortgages and other loans mostly in Swiss francs and euros to take advantage of lower interest rates. But they also took on much higher currency exchange risks.
"A lot of households in Central and Eastern Europe are ... feeling significantly more stressed about their private finances than just a month ago," said a research note from analysts at Danske Bank.
With the forint sinking, the monthly installment in October for a loan in Swiss francs, for example, may be 15 percent higher than in September.
While analysts say temporary weakness of the forint would have only limited effects on debtors, if the currency fails to recover for months, the impact will widen.
The slump, combined with poor weather, also seemed to have hit the turnout at demonstrations in Budapest on Thursday.
Since September 2006, when state radio broadcast excerpts from a secret speech by Prime Minister Ferenc Gyurcsany in which he admitted lying about the economy to win the elections that year, protests seeking his ouster have become an integral part of Hungary's national holidays every March 15, Aug. 20 and Oct. 23.
But this time the rallies were fewer, smaller and less aggressive.
"It's true, there are fewer of us today," said Margit Kekkuti, attending the 1956 remembrance by Jobbik, a small right-wing group that frequently calls for the government's ouster. "It's cold and raining. It's a big shame."
Since his 2006 "lying speech," Gyurcsany's Socialists have introduced unpopular measures that have greatly cut the state budget deficit, which topped out above 10 percent of GDP during 2006, by far the largest in the European Union.
Efforts to reduce bureaucracy and trim spending have been made, but experts say that reforming a much-abused system of social benefits and further transformations in the health and education sectors must be made soon.
State cutbacks have resulted in lower economic growth _ GDP rose by just 1.3 percent in 2007 _ and Hungary also is coping with growing inflation, rising unemployment and increasing indebtedness.
"Given the size of the imbalances and the shock that has hit (Central and Eastern European) currencies ... it seems impossible to avoid a whopping hangover in the shape of a serious drop in economic activity in the region," Danske Bank concluded.
