Over last week, the forint gained 0.22% versus the euro, after easing 0.59% in the week before.

While the euro scored a little against the dollar on a mix of strong euro area October manufacturing PMI numbers that hardly dented expectations for more ECB stimulus in December, whereas data on US manufacturing growth grinding to almost a halt dimmed prospects for a Fed rate hike in December, the forint fell versus the common currency as well as against the dollar on the outlook of ever looser monetary policy in Hungary.

Investors also await with mixed feelings the publication on Tuesday of a new lending incentive scheme by the central bank of Hungary, fearing it could harm banksʼ profits while earlier central bank efforts failed to lift falling overall corporate lending.

Hungarian real interest rates can narrow further in the next years, the managing director of the National Bank of Hungary (MNB) reminded investors in a signed article on a news portal on Monday. Amid the MNBʼs efforts lately to present falling or negative rates as an additional “necessary” tool to stimulate household spending and corporate investments, analysts argue that such policy has yet to prove its worth in the global economy, while its impact should be even more limited, if not outright harmful, in such a relatively low-income country as Hungary, melting the value of return on capital at companies and narrowing banksʼ business.

But analysts agree with the projection of the MNBʼs managing director that, as he said, “with the real interest rate declining, a reallocation between domestic and foreign assets may cause a deprecation of the nominal exchange rate (of the forint).

Hungaryʼs government and central bank also want local banks to channel their excess funds currently at the central bank into longer-term domestic government debt to allow the government to retire some of its forex debt. If that succeeds next year, when a large amount of forex debt expires and needs to be re-financed, Hungary could reduce its forex debt to 20% of GDP in 2016, from 40% in 2011, Citigroup said in a note on Monday. That would then allow financial authorities to tolerate a weaker forint which, in such a scenario, would not lift the public debt ratio, Citigroup added.

Moodyʼs Investors Service is due to review Hungaryʼs sovereign credit rating on Friday, with some analysts projecting a raise of outlook to positive from stable. But the forints prospects were also dimmed by a note from Credit Suisse on Monday. Credit Suisse sees no change on either the Hungaryʼs junk rating or the outlook. However, “Hungary could return to the investment-grade league next year, in our view,” Credit Suisse said.

The government sold eight-week Treasury bills at a liquidity auction on Monday. The average yield lagged the secondary market benchmark as a result of a deep cut in the offer on small demand.

The forint traded at 283.60 to the dollar, down from final quotes at 282.24 on Friday and 281.49 on Sunday. On Monday, it moved between 281.16 and 283.83, a four-day low, after a one-week high at 280.05 on Friday, and an almost three-month low at 286.69 late last Wednesday.

It was quoted at 287.87 to the Swiss franc, down from 285.59 late Friday and 285.57 late Sunday. Its range on Monday was 285.20 to 288.19, an eight-day low, after a more than two-week high at 283.59 on Friday. 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.