The Hungarian forint experienced a see-saw session yesterday as the unit initially lost ground in step with other CE currencies, while it made a nice come back at the end of the domestic trading. As a result the EUR/HUF closed virtually unchanged from the opening levels (254.85 versus 255.0) on Tuesday. Nevertheless the intra-day development was quite rich. Initially, there was small-scale sell-off as the EUR/HUF followed bond yields in core bond markets higher. The pair easily broke the 255.0 resistance and set the new tree-months high at 255.63. Some kind of consolidation in core bond markets together with an announcement of the Government Debt
Management Agency that Hungary will issue a 10Y sterling bond soon brought a welcome relief for the forint. Hence, the forint managed to rebound during late afternoon yesterday, while the release of the January public budget figures had no impact on the market. Recall that the published Jan-Feb deficit (HUF 435.5) ‘surprisingly’ almost sharply matched the MinFin’s estimate. Today, the domestic eco calendar includes only a headline figure for the January industrial production (the output grew 13.7% y/y). Though this figure can provide some guidance for Friday’s release of the January foreign trade date, it should not be a market mover. The forint will be probably driven by a development in core bond markets, which has been unfriendly to high-yielding currencies these days.