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Forint eases versus euro on interbank market

History

The forint was trading at 306.87 to the euro late Friday on the interbank forex market, down from 306.52 late Thursday. At 306.45 to the euro early Friday, the forint moved between 305.22 and 307.39 after a more than two-month low at 308.56 Wednesday intraday. It is down 1.45% versus the euro from final quotes last Friday, after gaining 0.46% over the previous week. It is up 3.20% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

Eking out a small gain in the morning versus the euro, and a nearly three-month high against the dollar, on calm that returned to sovereign bond markets, the Hungarian currency turned around in the afternoon, when the euro pared losses then resumed strengthening versus the dollar after worse than expected data showed industrial output fell for a fifth straight month in the US in April, and consumer confidence eased in May.

Although recent yield rises that continued through Wednesday in euro zone core markets and until Thursday in Hungary helped restore some of the Hungarian sovereignsʼ risk premium appeal -- the trend continued on Friday with Hungarian yields falling less that those on the Bund -- investors cautiously retreated by the end of day, squaring books before the end of a roller-coaster week.

The forintʼs relatively poor performance may also reflect the outlook that sooner or later Hungary could be rated back into investment grade. This could prompt institutions barred from buying below-investment-grade assets back into Hungarian sovereigns which, in turn, should knock Hungarian yields to new record lows. This eventuality might also contribute to the current wariness of risk-seeking yield-hunters, analysts add.

The forint traded at 268.50 to the dollar, up from 268.75 late Thursday. On Friday, it moved between 267.90, a nearly three-month high, and 271.01 after an almost two-week low at 274.55 on Tuesday intraday.

It was quoted at 292.88 to the Swiss franc, up from 294.45 late Thursday. Its range on Friday was 292.24, a four-day high, to 294.97 after a one-week low at 296.50 Thursday morning. 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.

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