Forint loses out to euro, more to dollar

While the euro fell against the dollar in the latest twists of the Greek suspense, the Hungarian currency was left behind.

Underpinning the forint initially yesterday were two measures of National Bank of Hungary (MNB).

It tightened foreign exchange funding rules for the bank sector as of January 1, 2016 in order to reduce banksʼ reliance on external funding, and it decided to launch a 10-year interest rate swap (IRS) facility for commercial banks in addition to the three- and five-year maturities already available, to provide support to banks in increasing and stabilising their holdings of long-term government securities, thereby reducing the costs of government debt financing.

The regular Tuesday auction of three-month Treasury bills with the average auction yield falling below 1% first time ever also helped, while secondary market yields on Hungarian sovereigns also fell across the entire curve, with their risk premium growing compared to Germans with faster-rate yield-falls.

The forint traded at 289.01 to the dollar, down from 286.27 late Monday. yesterday, it moved between 286.14 and 290.57, a second nearly four-month low within three days.

It was quoted at 304.99 to the Swiss franc, down from 303.52 late Monday. Its range yesterday was 303.04 to 305.98, after a more than five-month low at 306.16 late Sunday. 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.