Forint down on deflation, global growth fears
The forint was trading at 320.15 to the euro late Wednesday on the interbank forex market, down from 318.62 late Tuesday. At 318.44 to the euro early Wednesday, the forint moved between 318.40 and 320.75, a one-week low since its three-year low at 321.19 last Wednesday.
The Hungarian currency fell together with Central European and other emerging market currencies and equities as concerns over the global economy weighed on sentiment in the wake of a global growth forecast cut by the World Bank.
Data on Wednesday pointing to deepening deflation in Hungary also refueled local rate cut expectations, but a minority of analysts suggested that the high exposure of Hungary's government debt to external financing might tie rate setters' hands.
A badly received switch auction of Hungarian short-term bonds to long ones on Wednesday reflected investor reluctance, but the stabilisation of the euro against the dollar after recent falls, as dismal US retail trade figures from December out Wednesday distanced the chance of a Fed rate rise this year, also put some floor under the forint.
The forint traded at 271.11 to the dollar, down from 270.64 late Tuesday. On Wednesday, it moved between 269.99 and 273.16, a new more than twelve-year low.
It was quoted at 266.23 to the Swiss franc, down from 265.23 late Tuesday. Its range on Wednesday was 265.08 to 267.07.
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