Forint loses out to euro as dollar pressure returns

The forint was trading at 313.21 to the euro late Friday on the interbank forex market, down from 312.36 late Thursday. At 312.66 to the euro early Friday, the forint moved between 312.56 and 313.83, a five-day low, after an almost two-week high at 309.66 Thursday intraday, and another five-day low at 313.98 Monday intraday.

It is down 0.28% versus the euro from final quotes last Friday, after losing 0.13% last week. It is up 1.11% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

The Hungarian currency drifted further down while the euro lost its short-lived appeal versus the dollar on Friday as Thursdayʼs strong US data balanced Wednesdayʼs relatively dovish statement from the Fed, and the dollar regained strength.

Multiplying inroads of the Hungarian government into the countries bank sector, illustrated on Friday by the central bankʼs regulatory green light to a state-run investment vehicle to take over Budapest Bank from General Electric Capital, also reminded investors to volatility.

The benchmark ten-year Hungarian sovereignʼs yield edged up 4 bps to 4.19% on Friday on the secondary market, more than that of Poland, while Czech and Slovak yields fell. In the euro zone, Italian and Spanish benchmark yields also increased together with their risk premium over Bund, the yield of which fell steeply.

This also reflected uncertainty over the development in Greece that could have further short-term negative implications on CEE currencies, Raiffeisen said in a note, despite a recent row of analyses that played down any contagion from a Greek default.

"Here we could see additional forint and especially Polish zloty volatility," Raiffeisen said.

Commerzbank also said that "looking to Greece, we continue to recommend staying sidelined in CEE periphery countries, with the exception of Romania that observes strong fundamentals."

"We could well wake up on Monday morning with some surprise decision of historic proportions (on Greece)," it added.

The forintʼs upside is also under lid as analystsʼ project the National Bank of Hungary (MNB) to continue easing next week, while expectations for a lull afterwards thinned on the Fedʼs Wednesday statement.

The forint traded at 276.43 to the dollar, down from 274.96 late Thursday. On Friday, it moved between 274.59 and 277.06, after one-month high at 271.84 Thursday intraday, and a one-week low at 280.05 Monday intraday.

It was quoted at 299.95 to the Swiss franc, down from 298.37 late Thursday. Its range on Friday was 298.26 to 300.05. 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.