Forint mixed on interbank market

Caught between a rising euro and a weakening dollar, the Hungarian currency eased versus the euro, edging away from the under-313 level per euro, the 30-day moving average, which capped gains on the previous two days, analysts at Erste Bank said in a note.

On Tuesday the forintʼs moves were determined by the euro-dollar cross, dealers said, while the Hungarian government sold HUF 25 bln of three-month Treasury bills at a regular auction on Tuesday, HUF 5 bln more than planned, on wider demand, but with a slightly rising average auction yield.

The three-month Hungarian government paper yielded 0.87% on the secondary market Tuesday afternoon, 2 bps or 2.25% down from a day ago, but still above the auctionʼs 0.72% result, while the corresponding US yield eased 0.6 bps or 2.27% to 0.237%.

The three-month Hungarian sovereignʼs yield reached this yearʼs highest on January 22 at 1.85%, falling to 0.42%, the yearʼs lowest, by September 17 as a result of central bank measures that prompted domestic banks funds out of its facilities and into government paper. Since then the yield has steadily crawled back up, reflecting foreign investorsʼ discontent with yields deemed inconsistent with Hungaryʼs below-investment grade at the major rating agencies, with the US rate hike cycle looming. The trend since autumn makes it difficult for the forint to rise and help the year-end calculation of Hungaryʼs public debt which should show a slight annual fall to comply with EU rules.

The forint traded at 286.17 to the dollar, up from final quotes at 287.24 on Monday. On Tuesday, it moved between 285.63, an eighteen-day high, and 287.64, after a two-week low at 293.45 last week Thursday. On November 27, it fell to a third more than fifteen-year low within a month at 295.76.

It was quoted at 290.07 to the Swiss franc, down from 289.33 late Monday. Its range on Tuesday was 288.96, a thirteen-day high, to 290.29, after a nearly five-month low at 295.37 last week Wednesday. 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.