Forint eases, but rangebound on interbank market

At 315.26 to the euro early Wednesday, the forint moved between 314.55 and 316.39, a six-day low, after an eight-day high at 313.14 last Friday intraday.

Late afternoon the Hungarian currency succumbed to the euro/dollar cross with a slightly stronger dollar.

The forint, however, remained rangebound with the downside limited by support from the bond market, illustrated by small intraday gains versus the euro for a third day, and against the dollar for a second day. It slid all day long for a third day only against the Swiss franc, one of the vogue currencies together with the Japanese yen amidst the global turmoil.

In a flight from shares, secondary market benchmark yields fell all over the highest rated spectrum from the US to Europe. Hungarian yields also eased in the tailwind, but much less than the corresponding US or German yields, suggesting increasing risk premium lure as well, especially as eurozone periphery sovereigns could not benefit from the stock market collapse, and their prices fell.

Earlier market expectations for more nearside Hungarian central bank accommodation in view of slowing economic growth and smaller than expected inflation faded after central bank officials have said at a Euromoney conference in Vienna this week that there was no obvious reason to think about changes in the interest rate.

Hungaryʼs central bank is all but certain to keep its base rate on hold at 1.35 percent next week after it launched new measures last week to drive down long-term market interest rates, a Reuters poll showed on Wednesday, also supporting the forint.

According to the median forecasts in the poll, the base rate could stay flat at the current 1.35% through 2016 and rise to 1.83 percent by end-2017.

The forint traded at 289.73 to the dollar, down from final quotes at 288.91 on Tuesday. On Wednesday, it moved between 287.67 and 289.89, after a more than two-week high at 285.80 early last Friday. On November 27, it fell to a third more than fifteen-year low within a month at 295.76.

The forint was quoted at 288.80 to the Swiss franc, down from 287.96 late Tuesday. Its range on Wednesday was 287.51 to 288.96, a five-day low, after a more than six-week high at 286.33 last Friday intraday. Since a 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.