HUNGARIAN bond yields soared after tens of thousands of protestors gathered in the country to oppose a new “Basic Law” which activists fear could unfairly support the ruling party and undermine the independence of the central bank.
Critics also believe the new law, which replaced the existing constitution on new year’s day, curtails the jurisdiction of the top court.
Ruling party Fidesz is able to change the constitution because Prime Minister Viktor Orban won a two-thirds majority in elections in 2010.
The dispute has cast doubt over ongoing talks with the EU and IMF about a new financing agreement, seen as crucial for Hungary to shore up market confidence.
Yields on 10-year bonds rose to 10.373 per cent yesterday, up from 8.47 per cent a month ago and below seven per cent in September, reflecting investors’ growing fears that Hungary will not be able to pay its debts.