Hungary forint rebounds after Moody's outlook cut, still fragile

The strengthening was induced by the closing of short forint (and bond) positions opened on Wednesday, as well as the firming of Poland's zloty.

Government securities yields also firmed a touch on the fixed income market.

Emerging markets are still jittery, mainly over falls by the Icelandic crown triggered by criticism from rating agency Fitch, and the storm clouds may easily return to Hungary.

It is not yet clear whether the forint could hold at current levels of around 253-254 or weaken further, but market players agree that the EUR/HUF will definitely not test 250 in the short term. A strong resistance is seen at around 255.50.