The Hungarian forint firmed on Monday morning as markets were expecting a rate hike by central bank. At 2 p.m. NBH announced its decision to raise rates by surprising 50 bps.
Since the forint firmed already before NBH meeting the direct reaction of the market to the rate hike was only modest. Paradoxically the forint eased during the afternoon from the Monday’s high 275.85 EUR/HUF back to 277 EUR/HUF level. Today, we expect that the market will further digest yesterday’s decision about rate hike, which should add to good mood on the Hungarian market. At the same time yesterday’s critical comments of governor Járai concerning Convergence Programme might counterbalance this positive effect. Forint rebounds already before NBH meeting.
(CSOB - Investment research)