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Analysts blame global market for forint volatility

Buda-Cash brokerage analysts said the volatility of the forint over the past few weeks was due to global market processes rather than a speculative attack on the currency.

The analysts also said that the Central Bank (MNB) should further reduce the base rate in accordance with the global trend.

Buda-Cash sales manager Attila Szitás said events on foreign currency markets are more likely to determine the further course of trade on the forint rather than domestic macroeconomic news.

Szitás added that the reversal of the direction of capital-flow and carry-trade transactions have been among the main factors determining exchange rates recently.

Szitás said that hiking the base rate is only a short-term solution since it has no positive effect on the economy, adding that the rate must be adjusted to the global trend. Forint loans are more expensive as a result of the high base rate, while the stock of foreign-currency denominated loans has decreased.

Buda-Cash foreign-currency division manager Andrej Taraczky said the forint has been stable in the past years with regard to other regional currencies and even to currencies in developed markets.

Buda-Cash analysts do not consider the protection of the forint in order to help those with foreign-currency loans to be important, since these loans are still cheaper than forint-denominated ones. (MTI – Econews)