Forint eases on interbank market

MNB

The forint was trading at 307.05 to the euro late Wednesday on the interbank forex market, down from 305.85 late Tuesday. At 305.91 to the euro early Wednesday, the forint moved between 305.57 and 307.27 after a one-week high at 303.96 Tuesday intraday, and after another more than two-month low within a week at 309.68 Monday intraday.

After the shot-up on Tuesday on the ECBʼs plan to temporarily boost its QE in May and June, the euro and Central European currencies with it were subdued on Wednesday, with the euro sliding to a two-week low versus the dollar after a Greek official said Athens may not make an u%oming payment to the International Monetary Fund, and after better-than-expected US housing data on Tuesday refueled anxiety for a nearer-than-expected rate hike in the US.


The forint was back in its range of the previous weeks as dismal Polish data from April on slowing industrial production, deepening producer price deflation and falling retail sales raised the pressure on the Polish central bank to renew easing despite communicating an end to its cycle with a larger-than-expected cut in March. A surprise rate cut in Poland could prompt the National Bank of Hungary (MNB) to accelerate its on-going easing cycle, analysts say.


In this environment, even calm returning to sovereign bond markets with first-rated euro zone yields falling again and Hungarian yields following suite with widening risk premia could not help the forint.


Other factors playing against the forint are rating agencies apparent reluctance to upgrade Hungary back to investment level, and the volatile trajectory of Hungaryʼs public debt as shown by Mondayʼs statistics, while ever-rising balance of payment surpluses still underpin the currency.

The forint traded at 276.67 to the dollar, down from 274.55 late Tuesday. On Wednesday, it moved between 274.38 and 276.76, a more than three-week low after a nearly three-month high at 267.21 last Friday intraday.

It was quoted at 294.62 to the Swiss franc, down from 292.88 late Tuesday. Its range on Wednesday was 292.78 to 294.92 after a for-day low at 295.61 Monday intraday. 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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