Continued optimism on the domestic bond market spilled over to the Hungarian forex market, so the EUR/HUF pair was able to attack the 250.0 support once again during late trading yesterday. Initially, however, it seemed that the HUF would finish the session lower as EUR/HUF tracked EUR/PLN north. Nevertheless, the forint’s found ground around the noon and it erased all previous losses later on. Just before the closing EUR/HUF, driven by ongoing bullish sentiment in the domestic bond market, tested the 250.0 barrier, so the pair finished the domestic trading at the 249.95 It is worth mentioning that the market skipped the information about central bank operations in the FX market during the last quarter on 2005. The NBH unveiled that the bank had sold 174 m euros in the market during previous quarter, which implies that the bank exchanged only a small part of the government FX revenues from eurobond issues and the sale from of Budapest Airport (EUR 1.83bn). Thus, it is not surprising that the NBH’s FX reserves were lifted by EUR 1.13 bn in fourth quarter of 2005. igures and the MinFin press conference are two main evens of the day. Since the December inflation was in line with analysts’ consensus the forint should be unaffected by the release. As concern today’s MinFin press conference – the Ministry should present its estimates for a public budget development within this year including forecast for January. While we expect the MinFin’s estimates should have a rather neutral impact on the forint, it will be worth to monitor them.
(CSOB - Investment research)