Despite growing demands for resignation of
Prime Minister Gyurcsány after releasing of
a tape, which he admits his party lied over
the last two years and the government
literarily ‘did nothing’ during its previous fouryear
term, the Hungarian forint paradoxically
firmed yesterday. Better sentiment in
emerging markets and investors’ feelings
that Gyurcsány’s controversial speech
actually means the government’s strong
commitment to reforms sent EUR/HUF
south, so the pair could even test the 270.0
resistance today.
Nevertheless given the fact that thousands
of protesters gathered outside Hungary's
Parliament overnight to demand Prime
Minister Ferenc Gyurcsány resign, the
position of PM Gyurcsány does not look as save as Monday. Moreover, as investors will
watch pictures with protesters’ assault on
the building of Hungary's national television
on global TV’s like CNN and CNBC, the
forint could be under strong selling pressure.
We expect the forint will loose all previous
gains, while the key resistance for EUR/HUF
could come at the 274.80 level.
PM Gyurcsány finally tells the truth
Let us cite the key passage from the
recording leaked to several media, which
upset the Hungarian public. Recall that the
cited sentence is a part of Gyurcsány’s
speech at a faction meeting of the
Socialist Party in late May (after elections).
‘We have not much choice. Because we
have screwed it up. Not just a bit, (but) big
time. No country in Europe has ever done
anything so impudent that we did. [...] We
have obviously lied over the past one and
a half, two years. It was absolutely clear
that what we were saying was not true.
ČSOB Investment Research