Forint resilient after Greek ʼnoʼ to Europe

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The forint was trading at 316.06 to the euro late Monday on the interbank forex market, down from 314.68 late Friday, but up from 316.44 late Sunday.

Also at 316.44 to the euro early Monday, the forint moved between 314.95 and 317.12, after a third more than five-month low within a week at 317.28 Sunday evening.

Over last week it sank 0.78% against the euro, after gaining 31% the preceding week.

After the unavoidable wobble due to the Sunday evening result of the Greek referendum, the forint showed resilience on Monday. It even accelerated gains versus the dollar after an increasing, but weaker than expected June US services PMI late afternoon failed to bring the chance of a US rate hike any closer.

Greek woes may mean some temporary weakness for the Hungarian currency but it is set to firm in the medium term, local Takarekbank siad in a note on Monday. Hungaryʼs direct linkage with Greece is negligible while the Hungarian economyʼs performance is robust, its trade and current account surpluses are massive, public debt and external debt are on a declining path, and its sovereign debt ratings are expected to be upgraded back to investment grade in the coming months, Takarekbank said.

Others are less optimistic in view of supports Takarekbank cited slowing or declining lately.

The result of the Greek referendum will exert downward pressure on both the Hungarian currency and the Polish zloty in the days ahead, UniCredit said. It reiterated its view that with financial linkages to Greece significantly reduced, basic balances having improved and with ECB firewalls in place, the weakening of the Hungarian forint and the Polish zloty should be limited. A dovish set of Hungarian central bank minutes combined with a strong rebound in inflation would undermine the forint, UniCreditʼs note said.

Forint volatility is on the rise but market reactions likely will not be panicky, CIB Bank said.

Raiffeisen Bank projects that the forintʼs weakening trend, seen since April, will continue.

The forint traded at 285.46 to the dollar, down from 283.14 late Friday, but up from 287.80 late Sunday. On Monday, it moved between 284.11 and 287.82, after a near to four-month low at 289.25 Sunday evening.

It was quoted at 302.38 to the Swiss franc, down from 301.40 late Friday, but up from 304.83 late Sunday. Its range on Monday was 301.52 to 304.76, 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.

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