August 4th, 2009

Forint at 2009 high against euro; traders see new range below 265

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The forint reached a 2009-strongest rate of 264.52 against the euro early on Monday afternoon.

The forint last traded at below 265 against the euro on December 31, 2008.

Dealers remark that the forint strengthened past significant technical resistance levels against the euro at rates of 265.50 and 265.00.

Dealers add that if the forint remains below the 265-plateau against the euro for a considerable period of time, the Hungarian currency could establish a new range against its single European peer.

The forint has been trading at between 265 and 270 against the euro over the past week.

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Comments [5]
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  1. AW says:
    August 10, 2009 at 9:21 pm

    Is this a result of the hungarian central bank spending IMF/EU money to prop the forint, or a result of stronger economy?
    If not the latter, then for how long will these foreign currency reserves last?
    Or maybe is it a result of new wave of privatisation and export combined with lower domestic spending? What is your opininion?

  2. Erik says:
    August 11, 2009 at 10:08 am

    @AW: The primary reason is just a general improvement in sentiment about “emerging” economies like Hungary, and note that forex markets always tend to “overshoot.”

  3. Donizelli says:
    August 11, 2009 at 5:44 pm

    But only if YOU say so, Erik. After all, YOU always seem to know absolutely everything.

  4. Erik says:
    August 12, 2009 at 11:13 am

    @Donizelli: Funny you should say that, because when people ask me – and they do, constantly – about which way the HUF is going, I tell them I have no idea… only that whichever way it goes, FX markets have a tendency to ‘over-react’. My other statement is just what people in the market seem to be saying, i.e. it’s not really about Hungary specifically, just a general growth in the appetite for “emerging” currencies.

  5. TiborTakács says:
    August 12, 2009 at 5:55 pm

    AW. The forint has been heavily supported with
    loan money from the IMF/EU. Courtesy of MNB Governor
    Andras Simcor.
    Hungary has squandered its chances of making real progress over the past several years because of
    pitiful and corrupt government.
    Investors and entrepeneurs are at the “watching brief” stage at the moment.
    A strong government with new ideas and a determination to bring in the reforms this country so badly needs and a will to fight the widespread corruption would help.