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Hungary's forint grows weary attacking 255 vs. euro

Hungary's forint has tried to no avail for days to break south of 255 versus the euro and it has apparently grew fatigue in its repeated attempts.

On Wednesday the forint hovered in a tight range between 255.00 and 255.50 in morning session and eased to 255.70/256.20 by late afternoon trade. The forint's peers in the region were largely flat to the euro today. Yields dropped 1-4 basis points at shorter maturities on the local secondary market, while longer instruments saw yields going up to a similar extent, compared to late Tuesday levels. An auction of 3-year bonds (Ft 75 billion on offer) by the Government Debt Management Agency (ÁKK) will be in focus on Thursday.

Another important event from the markets' point of view will be a speech by central bank (NBH) Governor Zsigmond Járai, who attends a forum of the American Chamber of Commerce (AmCham) tomorrow. The Finance Ministry will publish preliminary figures for the November budget balance at 17:00 CET on Thursday, which also deserves some attention. Moreover, the European Central Bank (ECB) is almost certain to raise rates by 25 basis points to 3.50% tomorrow, but the subsequent comments will be of even greater importance, as it could pave the way for further tightening in the spring of 2007. (