The Hungarian Forint did not respond to any of domestic events and firmed before midday to EUR/HUF 260.30 in step with other East European currencies. Forint followed particularly the Polish zloty, which gave up previous gains as Polish government announced that it had cut its 2006 target for privatization revenues. Moreover, the contagion from Turkey weighed too, so the EUR/HUF pair surge to the 262 area during off-shore trading and it has opened even higher this morning as the pair has already toughed the 264 zone.
Since Hungary has from macroeconomic point of view many similarities with Turkey (especially the huge C/A deficit) we are afraid that more problems of the TRY might lead the Hungarian forint even lower today.
(CSOB - Investment research)