Forint hovers near recent highs as markets eye cenbank meeting
By Anita Komuves
The Hungarian forint edged up on Monday, hovering close to recently hit highs ahead of the Hungarian central bank's meeting on Tuesday where policymakers are expected to keep the European Union's joint-highest base rate unchanged.
The forint EURHUF added 0.1% and was trading at 383.85 to the euro, crawling back towards a 1-1/2-year high it hit at the beginning of last week at 383.1.
Analysts were unanmimous in a Reuters poll published on Friday in predicting the central bank would leave its base rate at the EU's joint-highest level of 6.5%, marking a 14th month of steady rates.
The high base rate makes the forint attractive for carry trades, which has been supporting the forint for several months.
"The market will focus on forward guidance, especially after the increase in the planned public deficit," analysts at ING wrote in a note.
"The baseline hawkish tone should help keep HUF on the stronger side... The Hungarian government reiterated in recent days that the new US 'financial shield' should protect the HUF in case of a sell-off, which is likely to provide some security for investors," they wrote.
Last Tuesday Hungary said that it was raising its budget deficit targets to 5% for 2025 and 2026, putting pressure on both the forint and bond yields.
Prime Minister Viktor Orban also said that Hungary could choose from four or five facilities to shore up its finances under an agreement with Washington, with funding worth up to $20 billion available if needed.
Elsewhere, the Polish zloty EURPLN was a touch stronger on the day, trading in its recent range at 4.223 per euro after firming to its strongest since April earlier in the session.
"In our opinion, the zloty's performance in the coming days will be primarily dependent on global trends and sentiment," analysts at PKO Bank said in a note.
Stocks in the region traded mixed, with Budapest's blue chip index adding 0.2% while Warsaw's stocks slid 0.4%.
Markets in Prague were closed for a holiday.
CEE MARKETS SNAPSHOT AT 1006 CET | |||||
CURRENCIES | Latest trade | Previous close | Daily change | Change in 2025 | |
Czech crown | 24.1550 | 24.1800 | +0.10% | +4.36% | |
Hungary forint | 383.8500 | 384.2000 | +0.09% | +7.18% | |
Polish zloty | 4.2230 | 4.2240 | +0.02% | +1.27% | |
Romanian leu | 5.0839 | 5.0855 | +0.03% | -2.11% | |
Serbian dinar | 117.1500 | 117.1600 | +0.01% | -0.17% | |
Note: daily change calculated from 1800 CET | |||||
STOCKS | Latest | Previous close | Daily change | Change in 2025 | |
Prague | 2480.93 | 2480.9300 | +0.00% | +40.95% | |
Budapest | 107554.87 | 107297.46 | +0.24% | +35.58% | |
Warsaw | 2977.79 | 2990.37 | -0.42% | +35.85% | |
Bucharest | 23463.48 | 23441.02 | +0.10% | +40.33% | |
BONDS | Yield (bid) | Yield change | Spread vs Bund | Daily change in spread | |
Czech Rep 2-year | (CZ2YT=RR) | 3.6490 | 0.0700 | +162bps | +8bps |
Czech Rep 5-year | (CZ5YT=RR) | 4.0530 | -0.0110 | +176bps | +1bps |
Czech Rep 10-year | (CZ10YT=RR) | 4.5700 | -0.0170 | +187bps | +0bps |
Poland 2-year | (PL2YT=RR) | 4.2140 | -0.0890 | +219bps | -8bps |
Poland 5-year | (PL5YT=RR) | 4.7120 | -0.0040 | +242bps | +1bps |
Poland 10-year | (PL10YT=RR) | 5.3240 | -0.0260 | +262bps | -1bps |
FORWARD RATE AGREEMENTS | 3x6 | 6x9 | 9x12 | 3M interbank | |
Czech Rep | (CZKFRA), (PRIBOR=) | 3.61 | 3.63 | 3.70 | 3.55 |
Poland | (PLNFRA), (WIBOR=) | 3.91 | 3.72 | 3.67 | 4.27 |
Note: FRA quotes are for ask prices | |||||