Depreciating trend of forint against euro could resume

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The forint is unlikely to remain at its relatively strong current 301-306 levels against the euro for long, Erste Bank said in a note yesterday. 

Hungarian policy makers have indicated that they would not oppose a weaker forint to promote exporters' competitiveness, and a stronger forint would not help Hungary reach its 3% inflation target.

The National Bank of Hungary (MNB) has indicated it may re-launch its rate-cutting cycle by the end of March, and that it might restore the forint's depreciating trend, the house said. The renewed easing cycle may last for several months and even when it ends, the central bank might leave the door open to further rate cuts to avoid forint appreciation, according to Erste.

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