Hungary's forint was more volatile on Friday than in the previous days and the currency hovered between 246.50 and 247.50 throughout the day versus the euro. Yields of government securities rose on the whole of the curve on the secondary market.
The HUF opened at around 246.70/247.00 and weakened to 247.50 in morning trade, the highest level in the past few weeks. In early morning trade, however, the forint firmed back to around 246.50 only to close at 247.50/70, 12.45%-12.50% above parity in its 30 percent wide trading band.
Yields of government securities went up 5-7 basis points on the fixed income market from Thursday's fixings, primarily owing to the fact that the market now expects a rate cut of less than 100 basis points. The majority of analysts in a Reuters poll said they expected a rate reduction of 50 bps on Monday. The central bank's Monetary Council is to announce its rate decision at 1400 local time.
The yield of 3-month discount T-bills rose 4 bps to 9.61% today, which still indicates that the market does not exclude the possibility for even a 75-bp cut.
The base rate is currently 10.50%, the highest in the European Union.
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