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Forint firm on interbank market

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The forint was trading at 314.56 to the euro late Tuesday on the interbank forex market, down from final quotes at 313.80 on Tuesday. At 313.65 to the euro early Wednesday, the forint moved between 312.81 and 314.63, after a five-day low at 315.25 late Monday, and a nine-day high at 311.25 late last Thursday.

The Hungarian currency lost a small intraday gain versus the euro after late afternoon data showed U.S. job openings surged to an all-time high in July, and the dollar soared.

The low yielding euro has weakened all day long while a recent unwinding of risky euro-funded carry trades took a breather because stock markets rose worldwide.

The euro had been supported in recent weeks as investors, watching emerging markets tumbling in turmoil, unwound risky euro-funded carry trades which involved selling euros to buy high-yielding currencies for better returns. But in the short term, U.S.-German yield spreads are pushing back to their widest of the year, and risk-on mood is returning in emerging markets, all this starting to weigh on the euro as investors ponder returning to euro-funded carry trades, analysts say.

This could later also help the forint, if not against the dollar while the danger of nearside U.S. rate hike still lingers, but at least versus the euro, all the more as Hungaryʼs central bank is preparing to make three-month deposit rates its benchmark, instead of two-week deposit rates, at the end of September. The central bankʼs move will significantly affect banksʼ liquidity management as it shepherds them out of the banks deposit facility into government bonds, analysts add.

The forint traded at 281.98 to the dollar, down from 280.19 in final quotes on Tuesday. On Wednesday, it moved between 279.37 and 282.07, after a five-day high at 279.05 late Tuesday, and another more than three-week low in two days at 282.92 late last Friday.

It was quoted at 288.30 to the Swiss franc, down from 285.83 late Tuesday. Its range on Wednesday was 285.76 to 288.30, after a three-week high at 285.09 late Tuesday. 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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