The Hungarian forint extended its losses
from Friday due to the negative mood
stemming from leaking information on a new
convergence program. Nevertheless the
Hungarian currency was able to rebound
intraday after the EUR/HUF pair had crossed
the 280 level and profit-taking started.
Although the government should submit its
revised version of the convergence program
on September 1 and Prime Minister
Gyurcsány promised to disclose some of the
details today, local press published part of
the draft version of the program concerning
forecasted budget deficit, debt, GDP growth
and inflation, which indicated that the euro
adoption might be postponed more than
markets had expected (Maastricht criteria
won’t be fulfilled by 2009).
Today the convergence program will be still
in focus. Prime Minister Gyurcsány is
expected to present more details on the
program in the afternoon. It is not yet clear if
the numbers, which were published in the
local press, are correct but we do not expect
significant changes. The question remains if
the program includes structural reforms on
spending side of the budget but it is unlikely,
that Prime Minister Gyurcsány will comment
on this issue today. We think that the forint
will remain under negative pressure and
might attack 280 EUR/HUF level again.
(CSOB - Investment research)