Yesterday, a strong foreign demand for Polish government bonds supported the zloty, which strengthened to its 1-month highs. It seems that the market has already digested planned changes in the pension system and Polish bonds recoup some of their recent looses. Also fading risk of military operation in Syria has helped to improve market sentiment.
Like the zloty, also the Czech koruna and the Hungarian forint firmed; none of them was able to maintain its gains till the end of the session, though. Surprisingly, announcement of the lower-than-expected Hungarian inflation in August did not make the forint weaken. In contrast, comments of the NBH’s governor Matolcsy on room available for further rate cuts did lead to slight currency weakening. Matolcy’s eagerly awaited press conference wasn’t primarily about base rates, though. The governor wanted to announce an extension of the Funding for Growth Scheme.
Initially, the program aiming at support of small and medium size enterprises through cheap financing started in June and provided refinancing loans worth of HUF 750 bn. Due to high demand, the NBH decided to substantially increase the amount offered (by HUF 2000bn until the end of 2014). Parameters of the program remain unchanged and the NBH believes that the cumulative positive impact of the program on GDP will be around 2 %.