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Forint down on interbank market as ÁKK narrows offer

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The forint was trading at 309.14 to the euro late Monday on the interbank forex market, down from 308.34 late Friday and 308.53 late Sunday.  At 308.63 to the euro early Monday, the forint moved between 308.21 and 309.30.

The multi-month high of 304.59 to the euro on October 10 already a memory the forint slid further, along with regional currencies, in cautious trade ahead of a US Federal Reserve meeting which ends on Wednesday.

It is broadly expected that the Fed will turn off the quantitative easing tap and might also give a hint on possible rate hikes in the US.

In Hungary, investors' growing dissatisfaction with yields they consider too low as a result of Hungarian central bank measures earlier in the year, was illustrated again on Monday when the Government Debt Management Agency (ÁKK) narrowed an offer of six-month bills on poor oversubscription.

Last Wednesday saw the first cancellation in four years of an entire offer, and a second halving of offer in as many days due to serious undersubscription.

Last Tuesday, ÁKK halved an offer of 3-month bills, and the following day did the same to 5-year floaters, and withdrew an offer of 12-month bills.

But the forint's fall could be limited if Monday's trend continues. Hungarian sovereign yields grew and those of US treasury bills fell on the secondary market while anxiety for an early rate hike next year in the US eased further, so Hungary's risk premium increased.

The forint traded at 243.11 to the dollar, slightly up from 243.35 late Friday and 243.41 late Sunday. On Monday, it moved between 242.60 and 243.71. It was quoted at 256.40 to the Swiss franc, down from 255.70 late Friday and 255.74 late Sunday. Its range on Monday was 255.50 to 256.52, a ten-day low.

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