Forint mixed on interbank market

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The forint was trading at 298.79 to the euro late Tuesday on the interbank forex market, slightly up from 299.09 late Monday. At 299.23 to the euro early Tuesday, the forint moved between 297.91 and 299.57, after en eleven-day high at 297.27 Monday intraday.

Contrary to bourses with the first opportunity on Tuesday to eagerly price the possibility of a rate rise postponement in the US in the wake of dismal US payroll data last Friday, the continuous interbank market has already started to push the Hungarian currency down Tuesday morning after a rise at the weekend.

The forint fell as the market also adjusted the euro down, considering the long-term effects of the ECBʼs QE which started in March. But late afternoon the dollarʼs pressure eased and the forint recovered against the euro and the Swiss franc.

The forint was also helped by analysts views who have second thoughts on the scope of the National Bank of Hungaryʼs (MNB) easing cycle re-started in March.

Goldman Sachs isnʼt convinced that Hungaryʼs central bank will slash interest rates as much as some are expecting. Price declines probably bottomed out in February, and the relatively strong forint currency could reverse some of the annual inflation declines for April and May, the house said in a note on Tuesday. It believes that food and energy price declines will start to wane and inflation will return to positive territory by the end of the third quarter, and that it will then accelerate quickly at the very end of the year. Goldman sees Hungaryʼs central bank lowering its key rate to about 1.6% in 2015 versus the current 1.95%. "We think that expectations of a turnaround in inflation and solid growth will reduce the National Bank of Hungaryʼs appetite for more aggressive easing," the house said.

The forint traded at 274.98 to the dollar, down from 273.80 late Monday. On Tuesday, it moved between 273.02 and 276.39, a five-day low, after a more than one-month high at 270.07 Monday intraday.

It was quoted at 285.43 to the Swiss franc, slightly up from 285.61 late Monday. Its range on Tuesday was 285.20 to 286.87, a four-day low. 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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