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Forint fairly stable on interbank market

MNB

The forint was trading at 300.50 to the euro late Friday on the interbank forex market, down from 299.79 late Thursday. At 299.97 to the euro early Friday, the forint moved between 299.68 and 301.31, a four-day low, after reaching a 13-month high at 297.25 Wednesday intraday. It is up 0.94% to the euro from final trades last Friday (3297) after a gain of 0.76% over last week. It is up 5.38% from the end of last year, after it lost 6.12% last year, and 1.95% in 2013.

Oscillating around 300 to the euro reflecting changes in the euro-dollar cross, the forint was fairly stable on Friday.

While Citigroup is bullish on the Hungarian currencyʼs prospects versus the euro on Hungarian economic data that is likely to outperform the rest of emerging Europe, CIB Bank said on Friday that moves in below the psychologically and technically significant 300 mark are not sustainable in the longer term. It cited the outlook for further Hungarian interest rate cuts, geopolitical risks related to a military conflict between neighboring Ukraine and Russia, and the expected start of the Fedʼs tightening cycle later in the year.

Central Europeʼs main currencies and government bonds eased on Friday after two Fed officials indicated the United States remained on track to raise interest rates later this year. This perception did not change much after the third GDP estimate on Friday confirmed a cool-down of the US economy at the end of last year, and a survey showed US consumer sentiment fell in March.

However, the Hungarian central bankʼs indication that cutting rates further from the new record low reached this week was a possibility did not do much harm to the forint either while expectations are high for other credit rating upgrades later in the year for Hungary after that by S&P last week, and as the ECBʼs QE gets underway.

Some analysts also doubt whether the Fed could swiftly whip up yields – which would lure investors away from emerging market assets – by lifting its base rate as US banks, flush with USD 2.5 trillion reserves parked at the Fed, do not need short-term funding.

The forint traded at 275.15 to the dollar, slightly up from 275.48 in final trades on Thursday. On Friday, it moved between 274.21 and 278.80, a five-day low. It hit a one-month high at 270.52 Thursday intraday.

It was quoted at 287.35 to the Swiss franc, down from 286.00 late Thursday. Its range on Friday was 285.52 to 287.84, a four-day low, after an almost three-week high at 282.68 Thursday 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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