Central European currencies retreated on Thursday after an overnight slump in crude prices in global markets boosted expectations for low inflation and continued accommodation by central banks in the region.

The Hungarian currency struggled back to about breakeven versus the euro and the dollar after the common currency stabilized against the dollar late in the afternoon.

Earlier the forint snapped a four-day spell of slow rises versus the euro driven by suspicions that an unexpected reappearance of inflation in Hungary in October could make it difficult for the National Bank of Hungary (MNB) to keep its base rate at the current record low level at least until end-2017 as it suggested in its latest guidance.

A regular auction of 3-, 5-, and 10-year Hungarian government bonds saw increased demand compared to the previous auction and a raise of offer for the 3-year tenor with increasing average yield. The 5-year tenor was sold in the offered amount on smaller demand and rising yield, and the 10-year paper also pulled weaker demand, so the amount was halved and the yield rose. Hedging 3- and 5-year preferential interest rate swaps (IRS) by the National Bank of Hungary (MNB), unavailable to non-residents, pulled small demand, suggesting that movements in the government paper sale were driven by foreign investors, in another illustration of the limits of the central bankʼs “self-financing” programme, a scheme to prompt domestic banks into government debt. Since yields fell to record lows in September, investors became increasingly discontent with Hungariansʼ yields and risk premia deemed too low compared to the countryʼs junk rating and rising US Treasury yields.

The forintʼs fall, however, was limited by Thursdayʼs data on high government reserves held at the MNB which suggests the government could repurchase debt by the end of the year in order to push general government dent down to levels acceptable to Brussels.

The forint traded at 289.76 to the dollar, up from final quotes at 290.23 on Wednesday. On Thursday, it moved between 288.95, a six-day high, and 291.99, after a more than fifteen-year low at 294.40 last Friday intraday.

It was quoted at 289.26 to the Swiss franc, down from 288.98 late Wednesday. Its range on Thursday was 288.45 to 290.16, after a 21, after a one-week high 288.29 Wednesday intraday, and a more than tow-month low at 292.71 last Friday intraday. Since its crash to an all-time low at 378.49 to the franc on January 15 when the Swiss central bank scrapped its cap of 1.20 to the euro, it reached the highest at 281.07 on February 26.