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Forint firm versus euro, pares previous loss against the dollar

Telco

The forint was trading at 310.64 to the euro late Thursday on the interbank forex market, up from final quotes at 311.33 on Wednesday. At 311.31 to the euro early Thursday, the forint moved between 310.12 and 312.21, after a three-week low at 313.61 late Tuesday, and an eight-day high at 308.23 last Friday.

The Hungarian currency continued to rise slowly against the euro, and regained more than half its steep late Wednesday loss versus the dollar which followed the publication of a hawkish guidance by the US Fed. Meanwhile the euro recuperated less than half of its Wednesday loss in dollar terms.

However, Commerzbank expected in its revised analysis on Thursday a HUF 315 course to the euro by the end of this year, HUF 320 by spring next year, and HUF 325 by next September.

They expect a HUF 292 course to the dollar by the end of this year, and 322 by next September.

Commerzbank projections are based on the probable US Fed tightening, sharply decelerating Hungarian GDP growth on scarcer EU funds and a global slowdown, and the Hungarian central bankʼs anticipated rate cuts. Commerzbank sees Hungaryʼs central bank cutting its base rate to 1.00% from the present 1.35% in the first half of next year, and stay pat even until the end of 2017.

Responding to a news portal query, the National Bank of Hungary (MNB) acknowledged on Thursday it has introduced a kind of quantitative easing "a la Hungarian" lately by purchasing Hungarian forex government bonds on the secondary market.

The query followed calculations that showed the volume of Hungarian forex sovereigns sold by US-based Franklin Templeton fund managers in the third quarter almost completely equaled the volume of MNB purchases in the period, and purchases seemed to continue in the present quarter as well.

The MNB said the transactions cut gross external debt, and, within that, short-term debt.

Analysts add that as such purchases benefit foreign holders only, this kind of asset buying is not suitable to boost domestic lending, while it may pressure the forintʼs course. Foreign investors sold HUF 1,234 bln of government securities in the first eight months after investing net HUF 88 bln in 2014.

A regular auction of forint-denominated 3-, 5- and 10-year government bonds on Thursday saw rising demand, and increasing yields.

The forint traded at 283.24 to the dollar, up from final quotes at 285.08 on Wednesday. On Thursday, it moved between 282.83 and 285.54, after an almost three-month low at 286.69 late Wednesday.

It was quoted at 285.58 to the Swiss franc, up from 286.81 late Wednesday. Its range on Thursday was 285.45, the strongest since last Friday, to 287.73, after a nearly two-month low at 290.35 and a five day high at 285.16 both last Friday intraday. Since its crash to an all-time low at 378.49 to the franc 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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