The Hungarian forint
set a new 11-month high of 265.15/€ this morning, up from around 266.50 on Friday. High-yielding currencies seem to witness decent demand from investors as the stable dollar and low volatility in general helps carry trades to gain popularity.
On the fundamental side, the Hungarian story has become light as no major data releases are scheduled for this week.
Although the EUR/PLN currency pair touched 4.05 EUR/PLN in intraday trading, the Polish zloty
closed slightly stronger at 4.01 EUR/PLN on Friday. Unlike the end of the last week, markets should focus rather on the Monetary Policy Council (MPC) meeting than on the balance of payments this week. The meeting is scheduled for Monday and Tuesday. We believe that central bankers will decide to increase the reference rate by 25 bps to 4%. Although the ECB is also expected to hike on Thursday, we think that the hike in Poland could play in favor of the zloty as it is less clear-cut than in the case of ECB.