The Hungarian forint tracked easing domestic bonds and retreated on Wednesday. A trigger for the bonds and currency weakening was probably a comment made by the S&P rating agency, which repeated its recent warning that Hungary’s rating would be downgraded after the April elections should a next government refuse to deliver fiscal reforms (or rather real tightening). So as a result the EUR/HUF pair drifted gradually south to the 251 area, closing at the 251.60 level.
Today, the domestic eco calendar contains a release of the December foreign trade, which could be a market mover. As we expected the deficit (EUR 189.4 m) was around the level recorded in December 2004, which means it was the lower gap than analysts’ consensus. The forint should benefit from the released figure and EUR/HUF might dip back to the 250 area.
ČSOB - Investment Research