The EUR/HUF pair bounced back above the 260 level on Friday as a positive correction in the euro-zone bond market proved to be short-lived. Although the forint started the session on a strong footing and EUR/HUF dipped even to the 258 zone, the Hungarian currency lost all of it early gains in the afternoon as EUR/HUF tracked the euro yields higher.
Today, all eyes will be on the NBH since the Monetary Council holds its interest-rate setting meeting. We stick to analysts’ consensus and do not predict any change in the NBH base rate. Nevertheless, the central bank will probably sound very hawkish and especially NBH President Jarai at his press conference. We suggest to read carefully the commentary from the meeting since it may indicate how nervous is the Council from the current exchange rate and the level of the risk premium. All-in-all, today’s meeting should have only a temporary (positive) impact on the forint and sentiment in emerging-markets’ universe might be decisive again.
(CSOB - Investment research)