Economy
Hungary forint falls on ECB criticism of c.bank bill
The HUF was quoted at 247.90/248.10 to the euro at 1000 local time, weaker than its Monday finishing level at 247.70-247.90-re after ECB President Jean-Claude Trichet said he had concerns about an amendment which would give the Prime Minister bigger say in appointing members of the central bank's rate-setting Monetary Council.
Trichet said there was “at least one element that doesn't seem acceptable in what's currently being proposed in the Hungarian parliament."
Dealers said there was no other market moving news this week but investors were watching. They keep an eye on Parliament on Tuesday, which is holding a debate on the amendment today. News coming out will be moving the forint, they said.
Analysts believe that despite the ECB and opposition criticism, the ruling coalition should be able to push through the changes without much difficulty.
At 1100 local time the HUF was quoted at around 248.10/30 versus the euro. Resistance at 248.65 is holding for the moment, but more euro strength could see next resistance at 249.80, said ABN Amro in a research note.
The fall of bond yields stopped on the fixed income market on Monday and yields have began to rise today. They went up by 6-12 basis points from Monday's closing levels on Trichet's comments. Dealers said a move by the forint towards 249.00 against the euro would likely trigger another wave of bond selling.
The Government Debt Management Agency (ÁKK) is auctioning off HUF 25 billion worth of 3-month discount treasury bills today, with results due at 1200 local time. The yield of the instrument (10.25%) on Monday showed that the market has started to price in another 25-bp rate cut. The central bank cut the base rate by 50 bps last Monday to 10.50%, which is still the highest rate in the European Union.
Trichet said there was “at least one element that doesn't seem acceptable in what's currently being proposed in the Hungarian parliament."
Dealers said there was no other market moving news this week but investors were watching. They keep an eye on Parliament on Tuesday, which is holding a debate on the amendment today. News coming out will be moving the forint, they said.
Analysts believe that despite the ECB and opposition criticism, the ruling coalition should be able to push through the changes without much difficulty.
At 1100 local time the HUF was quoted at around 248.10/30 versus the euro. Resistance at 248.65 is holding for the moment, but more euro strength could see next resistance at 249.80, said ABN Amro in a research note.
The fall of bond yields stopped on the fixed income market on Monday and yields have began to rise today. They went up by 6-12 basis points from Monday's closing levels on Trichet's comments. Dealers said a move by the forint towards 249.00 against the euro would likely trigger another wave of bond selling.
The Government Debt Management Agency (ÁKK) is auctioning off HUF 25 billion worth of 3-month discount treasury bills today, with results due at 1200 local time. The yield of the instrument (10.25%) on Monday showed that the market has started to price in another 25-bp rate cut. The central bank cut the base rate by 50 bps last Monday to 10.50%, which is still the highest rate in the European Union.
