Forint drifts further down on interbank market

History

The forint was trading at 307.12 to the euro late Wednesday on the interbank forex market, down from 306.48 late Tuesday. At 306.51 to the euro early Wednesday, the forint moved between 305.25 and 307.82, another eleven-day low. At 301.96 last Friday intraday, it hit a nine-month high.

Pressured by the US dollar rising again versus the euro, the Hungarian currency was also down on Poland's central bank slashing its main policy rate by 50bps to 1.50% on Wednesday, twice as much than the 25bps expected by most forecasters. This enhanced views that the National Bank of Hungary (MNB) should compete also with a larger-than-expected cut later this month from the present all-time low, 2.1%, level as ECB's QE is to start also this month.

The forint may fall and test levels around 310 to the euro again, with concerns around a possible Greek exit from the eurozone increasing again, Commerzbank said in a note on Wednesday. Weakness is also likely due to the Hungarian central bank's plans of further monetary easing. the house said.

Strong Hungarian January retail trade data out on Wednesday and waiting for the imminent start of ECB's QE which should help assets in emerging Europe have, however, slowed the forint's slide on Wednesday.

The forint traded at 277.35 to the dollar, down from 274.23 late Tuesday. On Wednesday, it moved between 274.08 and 277.40, a nearly five-week low.

It was quoted at 287.92 to the Swiss franc, down from 285.27 late Tuesday. Its range on Wednesday was 285.08 to 288.18, a two-week low. It reached the highest at 281.07 last Thursday intraday 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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