The Hungarian currency, along with Central European government bonds and currencies firmed on Wednesday amid optimism that a bond-buying programme the European Central Bank (ECB) is expected to announce on Thursday will boost regional assets.
The forint led the rebound, with bond yields dropping 10 basis points and the forint testing its highest levels against the euro since December 31, 2014.
The rebound is underpinned by most analysts saying that Hungary’s monetary system is less exposed to the Swiss franc’s volatility than initially thought. Against the franc, however, the forint was down as the euro fell again in franc terms.
Hungary’s central bank said on Wednesday it saw no need for immediate action in the local investment market after last week’s sharp gains in the Swiss franc as the number of clients who have made big losses on the move is low. “Local investment funds are barely affected by the problem or are not affected at all,” the National Bank of Hungary (MNB) said in a statement. It put clients’ losses stemming from the franc’s surge at over HUF 10 bln, which involved several hundred investors. But it said market disturbances in the wake of the move affected about 2% of local investment funds.
However, Societe Generale did not recommend, in a note on Wednesday, taking forint positions to play the ECB’s quantitative easing programme, “given the authorities’ vested interest in keeping the currency weaker.”
The forint traded at 271.20 to the dollar, up from 273.93 late Tuesday. On Wednesday, it moved between 269.39, an eight-day high, and 273.99, after falling to an all-time low of 280.33 last Thursday.
It was quoted at 314.85 to the Swiss franc, down from 312.80 late Tuesday. Its range on Wednesday was 312.13 to 319.76, after it plunged to an all-time low at 378.49 last Thursday.
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