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Forint retreats further on interbank market

MNB

The forint was trading at 307.88 to the euro late Tuesday on the interbank forex market, down from 307.04 late Monday. At 306.78 to the euro early Monday, the forint moved between 306.65 and 308.20, a five-day low.

Worries for Greece and Ukraine, and recent forecasts for a nearside base rate cut in Hungary chipped further away at the forint's strength seen in the last couple of weeks in euro terms, but the euro-dollar and the euro-franc crosses supported it against other major currencies.

Fresh central bank statistics also weighed, showing that despite cuts from previous quarters in the year Hungary's gross public debt was still 6.2% higher in nominal value at the end of last year than a year earlier, although its ratio to GDP came in at an unchanged 77.3% from a year ago, and down from 80.3% at the end of the third quarter, due to accelerated economic growth.

But the government's March-May debt issue plan out on Tuesday confirmed that the need to replenish the state treasury's deposits was far less pressing this year than at the beginning of last year.

At a regular auction on Tuesday of three-month Treasury bills the issuer stuck to the planned amount despite rising demand, and yields were unchanged from the previous sale a week ago.

Hungary's widening current account surplus, the up-coming quantitative easing of the ECB as well as talk on an expected upgrade of Hungary from junk to investment grade by rating agencies also underpins the Hungarian currency.

The forint traded at 270.11 to the dollar, up from 270.41 late Monday. On Tuesday, it moved between 268.75 and 271.38 after a four-day low at 271.55 on Monday intraday.

It was quoted at 289.33 to the Swiss franc, up from 290.08 late Monday. Its range on Tuesday was 288.69 to 290.56. On Thursday last week, at 287.21, it reached the highest 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.

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