Investors’ growing dissatisfaction with yields they consider too low as a result of Hungarian central bank measures earlier in the year, was illustrated on Wednesday by a first cancellation in four years of an entire offer, and a second halving of offer in as many days due to serious undersubscription.
On Tuesday, the Government Management Agency (ÁKK) halved an offer of 3-month bills, on Wednesday did the same to 5-year floaters, and withdrew an offer of 12-month bills.
After a report on falling inflation in the US, which pushed back Fed rate hike expectations to Q4 2015 from Q3 2015, yields of US notes increased as investors took some bets off the table. This also pressured the forint as Hungarian market yields rose much less for the day, diminishing the risk premium.
The forint traded at 242.32 to the dollar, down from 240.88 late Tuesday. On Wednesday, it moved between 240.28 and 242.46, a six-day low. It was quoted at 254.41 to the Swiss franc, down from 253.77 late Tuesday. Its range on Wednesday was 253.46 to 254.43.
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