Along with other Central European currencies, Hungaryʼs forint licked wounds on Wednesday on expectations the region will perform better than other emerging markets if the US raises interest rates.

“Emerging Europe countries experience improving external balances which makes them less vulnerable to Fed hikes particularly as long as the ECBʼs quantitative easing continues at its current pace,” Danske Bank said in a note.

But the upward correction remained minor compared to a huge dive late Tuesday and into Wednesday morning after a Fed policy maker, Atlanta Fed chief Dennis Lockhart who is considered neither a dove nor a hawk, said he was ready to support a September increase.

Currencies in Central Europe — where export-driven economies are strongly linked to the euro zone — were also supported by a healthy growth outlook in the single-currency region in the wake of a survey showing on Wednesday that euro zone business growth outpaced expectations in July after an agreement was reached on a Greek bailout.

However, the forint is projected to be volatile in the medium term as recent light US data, topped up on Wednesday with a widening US trade deficit in June on a strong dollar and private sector employment expanding in July at the slowest pace since April, apparently do not budge expectations for a September Fed lift-off, and Hungaryʼs central bank is expected to keep its policy rate at the present record low level well into the second half of next year.

The Hungarian central bank is now likely to find it easier to keep to its pledge to have ended its rate-cutting cycle than it did in March, Morgan Stanley said in a note on Wednesday. Because headline inflation is set to accelerate, there are more upside than downside risks to CPI, and a normalization in global interest rates is approaching. Morgan Stanley expects Hungary to create negative real rates in the coming quarters simply by leaving rates at the current record low level while easing monetary conditions with various other, unconventional tools to lower funding costs meaningfully and help growth. Expects real policy rates to turn negative in late summer and stay at around minus 1% throughout next year.

A US rate rise could make higher yielding emerging market assets less attractive, even if the impact may wary according to domestic fundamentals. Analysts say the looming US tightening cycle has not yet been priced in on the Hungarian fixed income markets, and doubt whether the Hungarian central bankʼs self-financing tools can offset any sudden retreat of foreign investors as non-resident government bond holdings remain massive despite falling by 16% from April to July.

Hungaryʼs trade balance props up the current account, but its structure has deteriorated recently on imports falling rather than exports growing. Annual export growth slowed sharply and imports fell according to latest data from May, while imports fall in monthly comparison outpaced exports drop.

The forint traded at 284.71 to the dollar, a hair up from 284.82 in final quotes on Tuesday. On Wednesday, it moved between 282.92 and 285.80, a more than two-week low, after a three-week high at 277.00 late last Friday.

It was quoted at 290.12 to the Swiss franc, slightly down from 289.84 late Tuesday. Its range on Wednesday was 289.63 to 291.91, a five-day low, after a three-month high at 288.29 last Thursday intraday. Since its crash to an all-time low at 378.49 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.