Forint further up on interbank market

New inflation gauges of the National Bank of Hungary (MNB) out on Thursday all showed some acceleration from August, easing fears that the central bank would have to sink its base rate further.

A subtle backtracking by the governing Fidesz in its latest legislative plans for debtor relief and reports on progress towards a political solution in the Russia-Ukraine conflict also put a floor under the forint.

The day's yield trends, slightly increasing the carry content of forint assets, were supportive, too. The market yield on the 10-year Hungarian sovereign was up 8bps to 4.79% on the day by Thursday afternoon, while that of the similar US treasury dropped 2ps to 2.52% and that of the Bund eased 1bps to 0.99%.

Oversubscription was heavy at Thursday's auction in Budapest for one- and three-year sovereigns with primary yields falling a bit.

Regional risks and higher demand since the MNB excluded non-residents from its to-week facility might keep short-term debt and money market yields low even if long-term yields rise outside the region later as expectations for an early Fed tightening grow, traders say.

The forint traded at 243.20 to the dollar, up from 243.78 late Wednesday. On Thursday, it moved between 242.81, a four-day high, and 244.37. On Tuesday it hit the lowest since June 1, 2012, at 246.19.

It was quoted at 259.98 to the Swiss franc, up from 260.27 late Wednesday. Its range on Thursday was 259.80, a four-day high, to 260.71, after falling to the lowest since January 5, 2012, at 262.74 Wednesday morning.