Forint recovers on interbank market

Competition

The forint was trading at 303.90 to the euro late Tuesday on the interbank forex market, down from 303.53 late Monday. At 303.61 to the euro early Tuesday, the forint moved between 301.21, a six-day high, and 303.73.

The Hungarian currency hugged minor gains against the euro until late afternoon while the euro-dollar cross was almost unchanged on the day, after the European Commissionʼs improved growth projections and euro zone statistics on waning producer price deflation were balanced with caution ahead of the latest US payrolls data on Friday, which could crank up Fed rate hike expectations.

A morning turn of trend in European secondary bond markets with mostly falling yields, including those on Hungarian sovereigns, also helped.

Late afternoon, however, the market turned upside down, with euro zone yields rising and the euro advancing in dollar terms, leaving the forint behind, as the latest US foreign trade figures with a more than six-year high deficit again reshuffled cards in the FED rate hike guessing game.

Euro-forint is likely to trade around the 300 mark this year, Hungarian brokerage Equilor Investment said in a note on Tuesday. The ECBʼs bond purchases and the resulting abundance of money should keep the cross close to 300 until the US Fed comes clear on its plans. As a result of the Fedʼs policy normalization plans, euro-forint volatility could rise in 2H, with the cross oscillating between 290 and 315 then, Equilor said.

The forint traded at 271.32 to the dollar, up from 272.32 late Monday. On Tuesday, it moved between 270.05 and 273.66, a five-day low, after a more than two-month high at 268.96 last Friday intraday.

It was quoted at 293.32 to the Swiss franc, down from 291.40 late Monday. Its range on Tuesday was 289.48 to 293.44, a ten-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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