"Amid unbroken optimism in global markets, the Hungarian currency hit the 270 mark vs. the euro, shining more brightly than at any time in the past 6 months. Exchange rates vs. the US dollar and the Swiss franc are likewise at their strongest since mid-January. The region's other currencies are also doing well, especially the Polish zloty which is at a 1.5-month high compared with the euro.The forint got another boost after 4:30 p.m., the EUR/HUF rate plunged below the 270 mark in the interbank market. This has been the strongest level since mid-January.
Macro data from the US have been essentially in line with expectations.
The intense firming of the forint was paralleled by other regional currencies in the favourable global investment climate. The Polish zloty has been stable at 2% throughout the day; meanwhile the Hungarian forint and the Czech koruna gained “only" 1%. The rise of the Polish currency is driven by news of a USD 4.5 billion standby loan facility from the World Bank.
The USD/HUF and CHF/HUF rates dipped below 191 and 177, respectively. These are both 6-month peaks for the forint.
In the secondary government bond market, the advance of the forint triggered an intense erosion of yields for the second day in a row. Bond traders reported heightened rate cut expectations. In a report released today, Goldman Sachs also updated its interest rate forecast, projecting a 150 bp fall in a 12-month time horizon thanks to parliamentary approval of 2010 tax changes and Hungary's improved external position.
It seems that the unexpected resignation of Croatian PM Ivo Sanader did not have a negative impact on investor confidence in the CEE region. Croatian stocks headed south, while the kuna suffered only a temporary dip vs. the euro."
Source: Portfolio Online Financial Journal
02.07.2009