"While a visit by International Monetary Fund (IMF) Managing Director to Budapest on Tuesday has greatly cooled off concerns, Hungary's forint has staggered after a sharp appreciation yesterday afternoon and its “health status" has not improved by Wednesday morning either.Hungary's forint slumped to around its historic low at 285 to the euro on Tuesday morning over exaggerated fears about a possible cancellation of Hungary's EUR 20 bn credit deal with the IMF. Statements by Finance Minister János Veres and IMF Managing Director Dominique Strauss-Kahn later in the day cooled jitters off and the HUF firmed in several waves to around 274-275. By the evening, however, it eased back to 278-279.
While the forint firmed during the night to yesterday's best, it has kicked off Wednesday's trade on the weakening side, depreciating to 277 by 09:30 CET. Shifts in the exchange rate of the region's other key currencies (+/- 0.5% so far) are not helping the HUF find its way, either.
Investors are now focusing on the latest inflation data to be released on Thursday. The Dec CPI will greatly influence the Monetary Council in its rate decision next Monday. Before the sharp weakening of the local currency, the market said the MPC would certainly deliver yet another 50-bp rate cut to 9.50%. With the HUF this weak, however, it has become questionable whether there is scope for such monetary easing.
Amidst serious tensions on the market yesterday morning, the HUF hovered around 192 to the Swiss franc and managed to correct back to around 186 in the afternoon session. Against the USD the forint firmed by now to around 207 from early yesterday's 215. The greenback's substantial easing to the euro (to 1.3320 from 1.3150) played a key role in this."
Source: Portfolio Online Financial Journal
14.01.2009