The Hungarian FX market remained jittery
on Wednesday, as political situation didn’t
calm down. The Prime Minister Gyurcsány
repeated that he would not give in to
opposition threats. At the same time the
main opposition party Fidesz cancelled its
boycott of parliament on Friday but warned
of an uprising if the Prime Minister doesn’t
step aside and the president Laszlo Sólyom
said that the confidence vote does not meet
his request for assessing prime minister
conduct. On the top of political turmoil Japan
Credit rating (JCR) agency revised
yesterday the rating on foreign currency
long-term debts and bonds of Hungary to
A-/Stable from A. Although JCR does not
belong to biggest rating agencies it definitely
has some significance at least for Japanese
investors. In spite of these negative signals
the forint recovers late in the afternoon and
ended the session below 275 EUR/HUF
level.
Today the economic calendar is again blank
and from external events the ECB reference
meeting will be in focus. With regard to the
fact that the rate hike is widely expected we
believe that its influence on the forint will be
limited and the Hungarian FX market will
remain jittery before Friday’s confidence
vote and planned demonstrations.
(CSOB - Investment research)