The Hungarian forint on Monday again
followed the region and firmed. The unit
however was unable to break through its 5.5
month high set last week at EUR/HUF
258.85 and in the afternoon again followed
the region and slightly corrected and ended
the session at EUR/HUF 259.64.
The currency even shrugged off the latest
economic forecast of the European
Commission, in which the commission stated
that it expects Hungary’s budget deficit
significantly above the government’s targets.
For the next year the budget deficit will reach
according to EC 7.4% of GDP, while
government plans to achieve 6.8% of GDP,
the difference of 2008 projection is even
bigger – 5.6% versus official target of 4.3 %
of GDP.
Today the industrial output will be released.
We believe that industry’s slowdown was
more significant that market consensus sees
it, however at the same time we expect that
the regional development will be again
decisive. Neither October cash flow based
budget deficit is expected to be a market
mover. We believe that since US stocks rose
yesterday the positive sentiment should
persist on emerging markets and the forint
might break through 6-month high at
EUR/HUF 258.75, nevertheless due to
recent gains we do not expect it firming
below the 258 level against the euro.
(CSOB - Investment research)