The Hungarian market took officially notice
of the revised version of convergence
programme, which basically confirmed the
information leaked in the local press last
week. Initially the forint firmed, but when it
reached the support barrier at 275.00
EUR/HUF, the Hungarian currency reversed
course and ended the session at 276.65
EUR/HUF.
Intrestingly, Finance Minister Veres said that
Hungary could adopt the euro in 2011 and
denoted the year 2009 as a year when the
Maastricht criteria look achievable. We do
not share this view, since the new
convergence program forecasts government
gross debt at 70.8% of GDP and not
showing a sustained decline in the direction
of the 60% criteria. Other countries, like
Belgium and Italy, have been allowed on this
basis. On top of that, it is also very
questionable whether Hungary will keep its
restrictive fiscal policy in place in the run-up
to the 2010 elections.
The release of the retail sales today should
not have a major impact on the forint. Thus
the forint will watch other markets for
inspiration. US New home sales might be
stimulus for emerging markets, we do not
believe in large gains of the forint though as
it remains the most vulnerable currency in
the region.
(CSOB - Investment research)