Hungarian Forint Steady Despite Greek Turbulence

  • 7 Jul 2015 5:01 AM
Hungarian Forint Steady Despite Greek Turbulence
Greek woes may mean some temporary weakness for the Hungarian currency but it is set to firm in the medium term, analysts say after a brief wobble. The forint showed resilience on Monday, trading at 316.06 to the euro late in the day, down from 314.68 on Friday but up from 316.44 late Sunday. It hit an intraday low of 317.12 on Monday.

The Hungarian unit even accelerated gains versus the dollar, trading at 285.46, up from 287.80 late on Sunday. Economy Minister Mihály Varga also said last week that the Greek financial crisis was having only a slight impact on Hungary’s economy.

The forint is likely to firm in the medium term, local Takarékbank said in a note. Hungary’s direct linkage with Greece is negligible while the Hungarian economy’s performance is robust, its trade and current account surpluses are huge, public debt and external debt are on a declining path, and its sovereign debt ratings are expected to be upgraded back to investment grade in the coming months, Takarékbank said.

The result of the Greek referendum will exert downward pressure on both the Hungarian currency and the Polish zloty in the days ahead, UniCredit Bank said, but this will be limited. Forint volatility is on the rise but market reactions likely will not be panicky, CIB Bank said. Raiffeisen Bank, however, forecast the Hungarian currency’s weakening trend, seen since April, persisting.

Meanwhile the Budapest BUX share index finished Monday trade down 0.55% at 21,753.36 points. Still one of the best performing stock markets in the world this year, the Budapest parquet took an inevitable, but relatively mild hit in low volume trade on heightened uncertainty after Sunday’s Greek referendum.

The uncertainty fuelled risk aversion but no panic. OTP Bank (-2,06%) and Richter (-0,17%) have suffered a setback, while MOL was up on fuel-price rises (+0,24%), and Magyar Telekom (+1,01%), too, on a positive correction after recent falls.


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