ADVERTISEMENT

Forint dives again on interbank market

MNB

The forint was trading at 316.36 to the euro late Thursday on the interbank forex market, down from 314.55 late Thurssday. At 314.84 to the euro early Friday, the forint moved between 313.28 and 317.01, another almost three-year low.

It is down 2.56% over the week, after losing 0.83pc over the previous week. It is down 6.03pc year-to-date after sinking 1.95% last year.

Currencies in the region have come under pressure this week after a sharp slide in Russia's rouble raised spillover concerns in the EU's emerging east. Stock markets also hit multi-month lows.

Although the rouble stabilised on Thursday and Friday, and the US Fed's guidance pointing to patience toward raising rates also could have calmed markets, the forint's slide continued unabated, in tandem with the Polish zloty.

Conspicuously, intraday lows followed a comment of the deputy governor of the National Bank of Hungary (MNB) at a press conference. "In the short and medium term I can see no impact on the real economy (from the Russian situation) that would significantly affect Hungary," the deputy governor said in response to a question.

Limited gains of the Brent price on Friday could not dissipate expectations either for a resumption of anti-deflation base rate cuts next year by the NBH, if the present Russian turmoil clears up a little.

The introduction of negative deposit rates by the Swiss central bank helped the forint up Thursday versus the franc, but this impact was history by Friday.

Outflows from emerging-market local funds should hurt the forint and keep the local-currency government bond yield curve steep next year, though the lack of government debt issuance in hard currency will keep Hungarian credit spreads tight despite the direction of the country's peculiar policy making, Standard Bank economist Timothy Ash said in a note on Friday.

Citigroup closed its long USD/HUF position this week ahead of the Fed meeting, but said investors are likely to prefer being long USD versus relatively low-yielding riskier currencies like the forint and the zloty when they need to keep positions for a longer duration such as the upcoming holiday season.

The forint slide steepened on Thursday after NBH's governor said the central bank had no exchange rate target and is not compelled to intervene to stop the currency's weakening, and the central bank's international reserves provide appropriate protection.

The forint traded at 258.33 to the dollar, down from 256.02 late Thursday. On Friday, it moved between 254.93 and 258.73, a new more than twelve-year low. It was quoted at 263.06 to the Swiss franc, down from 259.16 late Thursday. Its range on Friday was 260.08 to 263.44, another near 2.5-year low.

ADVERTISEMENT

Regional income disparities remain pronounced Analysis

Regional income disparities remain pronounced

Parliament approves amendment to Competition Act Parliament

Parliament approves amendment to Competition Act

New CEO announced at Codic Hungary Appointments

New CEO announced at Codic Hungary

FAO–Food Bank convoy delivers food to those in need City

FAO–Food Bank convoy delivers food to those in need

SUPPORT THE BUDAPEST BUSINESS JOURNAL

Producing journalism that is worthy of the name is a costly business. For 27 years, the publishers, editors and reporters of the Budapest Business Journal have striven to bring you business news that works, information that you can trust, that is factual, accurate and presented without fear or favor.
Newspaper organizations across the globe have struggled to find a business model that allows them to continue to excel, without compromising their ability to perform. Most recently, some have experimented with the idea of involving their most important stakeholders, their readers.
We would like to offer that same opportunity to our readers. We would like to invite you to help us deliver the quality business journalism you require. Hit our Support the BBJ button and you can choose the how much and how often you send us your contributions.