The Hungarian forint gained slightly
yesterday as a 50 bps rate hike coupled with
NBH‘s hawkish statement brought welcome
support for the currency. It is worth noting
that forint’s reaction to the NBH decision
was not so straightforward as it would a
widened interest rate differential imply.
Nevertheless, the truth is that the forint
trades now visibly stronger as the EUR/HUF
pair slipped to the 274 area.
Interestingly, NBH’s President Jarai
mentioned the forint FX rate as he explained
Monetary Council’s decision. He expressed
his disillusion over the fact that the forint has
not strengthened significantly so far in spite
of the monetary tightening. So, the NBH
once again focuses on the FX rate level,
which could be forint’s positive (at least in
the medium term).
Today, the forint will further digest NBH’s
yesterday decision, which could provide
more support for the currency, especially
when sentiment in emerging markets’
universe improved slightly.
(CSOB - Investment research)