While markets in New York and in London were closed the Hungarian FX market was very quite and liquidity was lower. Hence the forint firmed during limited trading. The Hungarian unit recorded some gains, but mostly hovered around the EUR/HUF 261.0. Today, given the almost empty domestic eco calendar, a publication of government program will be in focus. Nevertheless, we should stress that the presentation will not contain details of a planned fiscal adjustment and will only set general guidelines with respect to reform plans for the next four years. Thus, it actually might have only limited impact on the market.
So sideways trading above the EUR/HUF 260 level might continue, while an eventual confirmation of the proposed fiscal savings (HUF 350-400 bn) could deliver some support for the Hungarian currency. We should add that a development in the region might bring some stimuli, as the neighboring NBS is going to hike its official rate and it might have some impact not just on the Slovak koruna, but the forint too. EUR/HUF stands above 260, awaiting announcement of fiscal measures.
(CSOB - Investment research)