Forint firms, bouncing from resistance point

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The forint was trading at 301.02 to the euro late Friday on the interbank forex market, up from 301.86 late Thursday. At 302.02 to the euro early Friday, the forint moved between 300.65 and 302.46, after a more than almost two-week low at 302.56 Thursday intraday, following a new 15-month high at 295.28 Tuesday intraday.

It is down 1.31% versus the euro from final quotes last Friday after a gain of 0.66% over the previous week. It is up 5.19% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

The Hungarian currency bounced back from around 302 to the euro amid good market demand for the countryʼs sovereigns offering relatively growing risk premium compared to first-rated euro area assets with yields plunging to record lows amid fears that Greece might be squeezed out of the common currency zone.

Meanwhile, the ever growing dilemma to Fed policymakers whether recent weak US economic figures were a sign of persistent sluggishness, or just a temporary setback, underscored on Friday by tepid March US inflation data versus a consensus-beating rise in US consumer sentiment in April, forced the euro-dollar course into a narrow range after the dollarʼs losses earlier in the week, leaving the forint some elbow room.

However, after rises earlier in the week, the forint was still down from last Friday on local worries.

These include a decision by the EU to withhold some payments to Hungary from economic development funds on objections to the project selection system in the country. Less forex inflows could clip forint demand.

Some investors may also be channelling funds into the Polish zloty from the Hungarian currency as Hungaryʼs central bank is expected to cut rates further while the Polish central bank has apparently stopped its easing, traders said earlier.

The forint is also weighed down by official calculations that show the extra burden placed by this weekʼs legislation on Hungaryʼs financial sector in terms of propping up mandatory compensation funds in the wake of the collapse of three local brokerages could, within a couple of years, equal the amount of the bank tax cut planned for next year, although some of the extra payments may be deductible from the corporate tax.

The forint traded at 279.14 to the dollar, up from 280.50 late Thursday. On Friday, it moved between 277.46, an eight-day high, and 280.86, after a nearly four-week low at 283.51 Wednesday intraday.

It was quoted at 292.88 to the Swiss franc, up from 293.44 late Thursday. Its range on Friday was 291.41 to 293.72, after a more than two-month low at 293.84 Thursday intraday, following a four-day high at 284.84 Tuesday 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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