The Hungarian forint firmed slightly to nearly 250 EUR/HUF but failed to break through this level yesterday. Particularly the change in the sentiment on the bond market, which recovered significantly in spite of the bearish mood on core markets, helped the forint. The positive mood on the Hungarian bond market as well as positive regional sentiment will support the forint today. The market will wait for the January budget data which will be published in the afternoon. The Ministry of Finance expects a deficit of HUF 176 bn, which is HUF 23 bn less than a year ago in spite of 5 percentage points cut of VAT rate. Our forecast is slightly more pessimistic than that of the Ministry of Finance. The forint may fluctuate around the level of 250 per euro and remains sensitive on the bond market development. In case of breaking that level, profit-taking is likely.
(CSOB - Investment research)