"Hungary's forint opened at around 242.50 to the euro on Thursday morning and amidst moderately positive global sentiment started to firm, reaching 241.80/242.10 shortly after 10:00 CET. The US dollar, which has been gaining strength since Tuesday afternoon, reached a three-week high versus the single European currency.The firming of the greenback is mainly attributable to remarks made by Federal Reserve Chairman Ben Bernanke on Tuesday and Wednesday.
Since the revaluation of the Slovakian koruna's central parity in the middle of last week, the HUF has been hovering in a tight range between 240.30 and 2430.00 versus the EUR. Currency dealers said “a fight is on" in the background to nudge the forint in either direction - push it south of 240, the end of its former trading band or send it north, which would be a more justifiable place considering Hungary's macroeconomic fundamentals.
The forint managed to firm against the USD today morning to around 156.70 from around 157.50 late on Wednesday. CHF/HUF is quoted at around 149.80-150.00.
The appreciation of the greenback started after Federal Reserve Chairman Ben Bernanke issued a rare warning about the inflationary risk of a weak USD.
“We are attentive to the implications of changes in the value of the dollar for inflation and inflation expectations and will continue to formulate policy to guard against risks to both parts of our dual mandate, including the risk of an erosion in longer-term inflation expectations," Bernanke said.
In practice, his comments suggested the Fed is done lowering interest rates and may be looking to hike rates towards the end of the year.
The USD moved from Tuesday morning's 1.56 vs. the EUR to between 1.54-1.55 and it briefly visited the 1.5390 level this morning, which is its firmest to the euro in three weeks."
Source: Portfolio Online Financial Journal
06.06.2008