On Thursday, the Hungarian forint was traded around 280 EUR/HUF

On Thursday, the Hungarian forint was traded around 280 EUR/HUF throughout the whole session, which was weaker than Wednesday’s closing values. The main reason behind weakening was heightened tension in the Middle East and negative comments from EU Economic and Monetary Affairs Commisioner Joaquin Almunia. In a newspaper interview he said that Hungary’s public finances are the most problematic in EU. On the top of that, uncertainty persists on the proposed tax changes. The new tax law proposal approved by parliament was sent to the president and if he sends the law to the Constitutional court (opposition claimed that several of proposed measures are unconstitutional), the process of consolidation of public finance would be slow down, which would be unambiguously negative for the markets. President has time until Monday to decide.

Today the risk remains for the forint to be negatively influenced global emerging market uncertainty due to the tension between Israel and Lebanon. The forint this morning already trades back above the central parity at 282.36 EUR/HUF. A sustained break above would open de way to the highs in the 285-area.

(CSOB - Investment research)