The Hungarian forint firmed on Thursday morning to its 1.5-year maximum at 270.50 against the euro and although it gave up some of its gains, it ended stronger than Wednesday’s closing values, at 271.15 EUR/HUF.
The main impetus for forint’s strengthening was publication of U.S. Beige book late in the afternoon on Wednesday, which signalized end of monetary tightening, and the positive comment of European Monetary Affairs Commissioner Joaquin Almunia on Hungary’s austerity measures. Almunia said in an interview that the Hungarian government has made a credible commitment to cut the excessive deficit. On the contrary, the forint shrugged off the statement of Economy Minister János Kóka, that Hungary has abandoned its official 2010 euro-adoption target, since the same information was given at the beginning of this week by Finance Minister János Veres at a press conference in Brussels and markets are waiting for publication of Convergence Plan at September 1.
Today, in the absence of any domestic data releases the forint will follow regional sentiment, which should remain rather positive. The most interesting data will be released in the afternoon – U.S. GDP and deflator. If the data supports expectations about the end of monetary tightening cycle in the U.S.A. the forint might test technical barrier at 270 against the euro.
(CSOB - Investment research)