While the Greek debt crisis was “postponed” to next week when a euro zone finance minister’s meeting should pick up the threads on Wednesday, Central European currencies mostly firmed against the euro, led by the Hungarian forint, as the ECB’s new bond-buying programme to start in March turned investors onto the region’s higher-yielding assets.
Fresh data on a big leap of the international reserves of the National Bank of Hungary (MNB) in January to above €38 bln, the second time in history after a blip in September, 2011, also helped.
However, as the euro fell against the dollar after data showed both US employment and unemployment rose in January, the forint also lost out to the US currency and the Swiss franc.
The quasi certainty built up this week that the MNB will restart easing in March does not hurt the forint as investors reckon that a parallel quantitative easing of ECB might push first rate yields down even more, so Hungarian assets ought to preserve their yield premium while investors hunt around for any yield in a flattening market.
Most analysts still pencil in an MNB rate cut of 30bps to 60bps beginning in March, with Barclays expecting Hungary’s January inflation figures next Wednesday to indicate deepening deflation to the tune of minus 1.3% on the year after minus 0.9% in December, but expectations for deeper cuts were confounded on Friday, after the parliamentary chief whip of the governing FIDESZ party said the government should aim at low inflation on the long term.
The forint traded at 269.54 to the dollar, down from 267.35 late Thursday. On Friday, it moved between 266.77 and 270.35. It reached a one-month high at 265.81 on Thursday.
It was quoted at 291.23 to the Swiss franc, down from 290.16 late Thursday. Its range on Friday was 289.63 and 292.02. On Thursday, at 288.41, it reached the highest since the crash on January 15 when the Swiss central bank scrapped its cap of 1.20 to the euro. The forint plunged to an all-time low at 378.49 to the franc on January 15.
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