The Hungarian forint tracked the zloty lower on Monday as rumors about early elections in Poland hit Central European markets. Nevertheless, the forint losses were rather modest as the EUR/HUF pair opened at 251.05 and closed still within the 251 zone (at 251.65). Recall that the contagion from Poland was the only moving factor yesterday.
Since fears about early elections in Poland have proved to be incorrect the forint will have chance to rebound with other Central European currencies today. Moreover, the Ecostat, a branch of the Central Statistical Office, will publish its first estimate of GDP growth in the fourth quarter of 2005, which could be another supportive factor for the forint. Taking into account already released strong industrial output data, retail sales, construction activity figures and foreign trade balance we estimate that GDP growth was again very strong (in our view the growth should reach 4.5 % y/y). Although today’s GDP figure will be rather preliminary, the Hungarian unit should receive some boost from such a flash estimate. Hence, we will not be surprised, if EUR/HUF returns back to the 250.0 level this afternoon.
(CSOB - Investment research)