The forint firmed morning's interbank market, trading at 279.73 against the euro at 10:00 a.m., correcting some of its sharp loss on Thursday. The forint traded at 280.20 on Thursday afternoon and slipped to occassionally exceed 282 late on Thursday.
Dealers note that the forint weakened sharply from 274.25 on Thursday morning after Fidesz official Lajos Kósa announced at a conference that the goal of Hungary's new, Fidesz-led government is now to avoid default, stating there was a “chance [Hungary] could go the way of Greece”, and “the state of affairs is much worse than we thought.” Going against the general trend, Hungary's credit default swaps (CDS) prices rose more than 10b basis points on Thursday, CMA DataVision told MTI in London. The CDSs insuring Hungarian government debts were quoted at 270bp late on Thursday, up from 258.5bp a day earlier.
Dealers say that currency traders are awaiting an official clarification to Kósa's Thursday statement from Hungary's new government.
Dealers add that the forint is unlikely to strengthen to significantly below the 280-mark in trade against the euro on Friday.
The dollar commanded 229.41 forints on Friday morning, compared to a Thursday-afternoon rate of 227.20. (MTI – Econews)