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Forint firm against euro at lower level on interbank market

History

The forint was trading at 307.17 to the euro late Wednesday on the interbank forex market, broadly in line with 307.19 late Tuesday. At 307.23 to the euro early Wednesday, the forint moved between 306.50 and 307.49, after touching a four-day low at 307.83 on Tuesday.

After short peeks under 305 to the euro a couple of weeks ago, the Hungarian currency seems to be back to its range of 305-310, usual since early October, after it spent more than two months between 310-315 since late July.

On the day, the continuing slide of the euro in dollar terms kept the forint under pressure, while waning expectations for further base rate cuts in the region in the wake of the "no change" decision of the Polish central bank on Wednesday, underpinned it.

On the secondary market, Hungarian benchmark 10-year sovereigns' risk premium increased to both German Bunds and 10-year US treasuries, while Hungarians may also serve as alternatives in weightings as corresponding Russian government paper yields shoot up to prohibitive territory beyond 11%.

The upside of the forint, however, is limited by new doubts about the quantitative easing zeal of the ECB while low oil prices are increasingly seen as supporting economies, and US data supporting the dollar through growing expectations that the Fed might not delay too much its probable rate hike next year.

The forint traded at 249.60 to the dollar, down from 248.07 late Tuesday. On Wednesday, it moved between 247.85 and 249.66, a nearly four-week low. It was quoted at 255.16 to the Swiss franc, a hair up from 255.20 late Tuesday. Its range on Wednesday was 254.74 to 255.53, a five-day low. It hit a six-day high on Monday at 254.18.

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