MNB may come under pressure to hike base rate - analysts

Factors supporting the forint are hard to come by and the current risk environment may pressure the central bank into a big rate hike, London-based financial analysts said on Tuesday.

In its Daily Currency Briefing report released to investors in London, Commerzbank said that with losses of 3.3% against the USD and 2.2% against the EUR, the previous trading day "made it into the top 15 of the black days for the forint since early 2007".

So far the peaks in EUR-HUF seen during the financial crisis in early 2009 have not been reached. Due to the rising concerns about Greece the uptrend is gathering momentum, though.

The next hurdle at 292.07 is already in view and after that "there is much scope up to the magic 300 mark".

The search for HUF-positive factors is "turning into the proverbial search for the needle in the haystack", even the projected ad hoc measures intended to take the pressure off the households holding foreign currency denominated loans will only provide a temporary solution and only take the pressure off some of the households.

The systemic risk of high foreign debt remains in place and constitutes an imminent risk for the Hungarian financial sector.

The higher EUR-HUF or CHF-HUF climb, the higher the likelihood that the Hungarian central bank "will land its big strike" and might raise key rates by 300bps in an effort to slow the depreciation of the forint, Commerzbank said.