Forint rises on new hopes for Greece
The forint was trading at 313.98 to the euro late Wednesday on the interbank forex market, up from 315.10 late Tuesday.
At 314.92 to the euro early Wednesday, the forint moved between 313.48, a five-day high, and 315.46, after a more than five-month low at 316.32 Tuesday night when deadlines for Greece expired.
Along with Emerging Europe assets, the Hungarian currency benefited from improved market sentiment on new hopes for an after-hours agreement of Greece with its creditors which could forestall the euro area member countryʼs sliding into further defaults with the risk of bankruptcy and crashing out of the currency union.
But the forint is still far from its 305-310 range to the euro prevalent until the crisis around Greece became acute.
Money flowing out of Bunds into riskier assets also helped, while euro zone periphery yields fell more than those on Hungarian sovereigns, enhancing the risk premia, too, of the latter.
But the forintʼs rise in the hope of a solution for Greece is capped by expectations that such an outcome should also clear the way for the National Bank of Hungaryʼs (MNB) to continue its monetary easing as it projected in its latest guidance early last week, apparently not feeling hindered by the looming US rate hike either.
However, illustrated by yield rises of US treasuries outpacing those on Bunds until early afternoon, pressure from the other side of the globe accumulated as Fed vice chairman Stanley Fischer said on Wednesday the US economy probably bounced back in the second quarter, and the Fed even needed to stay ahead of the curve, since monetary policy only affects the economy with a time lag. "We should not wait until we have reached our objectives to begin adjusting policy," Fischer said.
The forint traded at 282.88 to the dollar, a hair up from 282.92 late Tuesday. On Wednesday, it moved between 280.73 and 284.02, after a more than three-month low at 287.25 last Sunday intraday.
It was quoted at 299.49 to the Swiss franc, up from 302.28 late Tuesday. Its range on Wednesday was 299.20, a five-day high, to 302.97, after a five-month low at 305.19 last Sunday intraday. 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.
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