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Forint loses momentum versus euro

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The forint was trading at 314.04 to the euro late Friday on the interbank forex market, down from final quotes at 312.78 on Thursday. At 312.74 to the euro early Friday, the forint moved between 312.69 and 314.33, after a nine-day high at 311.25 late Thursday, and a five-day low at 315.96 early Wednesday.

The forint is up 0.03% versus the euro from final quotes last Friday, after garnering 0.22% over the week before. It is up 0.82% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

While the euro fared quite stable against the dollar, Central European currencies eased on Friday, with the forint losing about half of its gains versus the euro in the past two days and continuing its retreat against the dollar for a third day, as optimism over ECBʼs "do-everything" message on Thursday abated, and recent fears for China and a possible U.S. rate hike returned in vengeance.

Actions of global central banks to boost inflation and growth remain the key drivers to Central Europeʼs assets and often overshadow local events. However, a second reading confirmation on Friday of a steep slowdown of economic growth in Hungary in the second quarter obviously did not come in handy.

As long as the uncertainty about the US rate prospects that mixed US payroll data have not dispelled on Friday, and about Chinese growth lingers, Central European currencies are likely to remain on the weaker side, although the ECBʼs dovish stance may support in the long run, analysts say.

A continuing fall of Hungarian sovereign yields on the secondary market did not help either, because first rated yields sank far more. In quieter times investors welcome such widening of Hungaryʼs risk premium, but the trend on Friday reflected risk avoidance after stock markets resumed falling, while the primary market of Hungaryʼs government bonds is increasingly reserved for domestic banks.

The forint traded at 282.54 to the dollar, down from 281.19 in final quotes on Thursday. On Friday, it moved between 280.03 and 282.85, another more than three-week low in two days, after a six-day high at 276.94 Tuesday intraday.

It was quoted at 289.41 to the Swiss franc, down from 288.89 late Thursday. Its range on Friday was 288.20 to 290.12, after an eight-day high at 287.07 Wednesday intraday. Since its crash to an all-time low at 378.49 to the franc 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. 

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