Forint wobbles on interbank market
The forint was trading at 312.53 to the euro late Monday on the interbank forex market, down from final quotes at 311.82 on Friday and 311.79 on Sunday. At 311.80 to the euro early Monday, the forint moved between 311.45 and 313.21, after a more than seven-week high at 310.72 late on Friday, and a six-day low at 316.53 late last Wednesday.
Over last week, the forint gained 1.14% versus the euro, after rising 0.51% over the week before.
The Hungarian currency lost out to both the euro and the dollar, while the euro resumed its rising path against the dollar after temporary pressure on it -- and a corresponding temporary boost for the forint -- faded from new hopes for additional easing raised by the European Central Bank last Thursday.
The forint remained fairly stable versus the dollar throughout the day.
Market certainty that Hungaryʼs central bank will not move at its Tuesday meeting did not influence the retreat.
Meanwhile, Erste Bank expects the yields on Hungaryʼs local-currency and dollar-denominated bonds to rise on foreign investorsʼ probable moves, only mitigated to a limited extent by continuing efforts of Hungaryʼs central bank to shepherd more fund of domestic banks into government paper. The house expects yields of Hungarian forint-denominated bonds to rise gradually by end-2016 due to Erste forecasting more US Fed rate increases than markets currently price in. It is cautious over dollar-denominated Hungarian bonds as the yield difference or spread between those and US Treasuries is expected to tighten since a Fed tightening cycle could spur yields to rise, mostly on the shorter tenors. There is some value in euro-denominated Hungarian bonds as supply is expected to remain stable or even shrink, while credit-rating upgrade of Hungary back to investment grade looms, Erste said in a note on Monday.
However, Rabobank expects the Hungarian forint to firm in the coming months. Sees the forint on course to revisit its 2015 peak of 295.62 to the euro, based on the technical outlook. As for fundamentals, it could break lower in the coming weeks or months due to the prospect of more stimulus from the
European Central Bank at a time when the Hungarian central bank plans to keep the benchmark rate unchanged. The downside is contained by strong resistance at 319-318 to the euro, after the 2012 and 2015 doldrums at 324.24 and 327.57, respectively, Rabobank said in its note on Monday.
The forint traded at 288.51 to the dollar, slightly up from final quotes at 288.80 on Friday and 288.67 on Sunday. On Monday, it moved between 288.04 and 289.15, after a one-week low at 291.27 late on Thursday. On November 27, it fell to a third more than fifteen-year low within a month at 295.76.
The forint was quoted at 284.18 to the Swiss franc, down from 284.06 late Friday and 284.00 late Sunday. Its range on Monday was 283.88 to 285.13, after a more than seven-week high at 283.60 Friday intraday, and a one-week low at 289.19 last Wednesday intraday. Since its crash to an all-time low at 378.49 to the franc on January 15, 2015, when the Swiss central bank scrapped its cap of 1.20 to the euro, it reached the highest at 281.07 on February 26, 2015.
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