Forint further up on interbank market
The forint was trading at 311.05 to the euro late Friday on the interbank forex market, up from 311.68 late Thursday. At 311.60 to the euro early Friday, the forint moved between 310.30, a more than seven-week high, and 311.70. It is up 1.29% on the week in euro terms after falling 0.44% over the previous week. It is down 4.43% year-to-date, after easing 1.95% last year.
The Hungarian currency completed a good one-and-a-half week healing process since it touched its lowest since January 6, 2012, at 317.29, on September 10.
This week, the Fed's statement did not bring closer the expected time of the first rate hike in the US, so the narrowing of the yield-spread between Hungarian and first rated assets slowed for the time being, and hopes for an extended quantitative easing from the European Central Bank (EVB) also helped.
The upside is limited, though, illustrated by the forint easing again in dollar terms late on Friday, analysts say.
The market is not expecting Standard & Poor's raising Hungary's credit rating when it probably publishes its statement later on Friday.
And long-term Hungarian government bond yields are doomed to rise in spite of the ECB's planned monetary expansion and a lower German yield outlook. The Hungarian central bank's policy is shepherding foreign inflows towards the short end of the curve, while the prospect of the Fed's rate hike should make inflows thinner anyway. Meanwhile, the increasing burden of the government's debtor relief programme, combined with the outlook of forex loan conversion into forint debts next year may further decrease local banks' appetite, too, for government bonds, Erste said in a note on Friday.
The forint traded at 242.28 to the dollar, down from 241.18 late Thursday. On Friday, it moved between 240.66, a more than two-week high, and 242.49.
It was quoted at 257.71 to the Swiss franc, up from 258.19 late Thursday. Its range on Friday was 257.02, a more than one-month high, to 258.44.
SUPPORT THE BUDAPEST BUSINESS JOURNAL
Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.