Hungarian forint set for third monthly gain on inflation signs
The Hungarian forint is set to gain for a third month, its longest winning run in two years, as signs inflation is quickening underpin views the central bank will keep interest rates at the highest in the European Union.
Hungarian borrowing costs have climbed 2% points this year as the central bank seeks to counter inflation, boosted by rising taxes and energy costs. Producer prices rose at an annual pace of 7% in October, compared with 4.1% a year ago, the Central Statistical Office (KSH) in Budapest said today. “Even at current levels, interest rates are very supportive of the forint,” said Tania Kotsos, senior emerging markets strategist at RBC Capital Markets. “We still have inflation pressure in Hungary, and there's a risk of one more rate hike.” Against the euro, the forint traded at 256.00 at 11 a.m. in Budapest from 257.16 yesterday and 260.36 on October 31. Kotsos expects the currency to advance to 254 per euro in three months. (Bloomberg)
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