Hungarian Forint: Lags as MNB cuts loom – Societe Generale
Société Générale identifies the Hungarian forint as July’s main Central and Eastern European (CEE) laggard, with EUR/HUF moving back above 363 as markets anticipate another 25bp central bank of Hungary Magyar Nemzeti Bank (MNB) rate cut to 5.75%. Diverging rate paths in Hungary, Czechia and Poland are eroding the forint’s carry appeal, while higher energy prices add to the pressure.
Forint under pressure as carry erodes
"The HUF has been the main laggard in CEEMEA this month (total return -1.8% versus the EUR) and the return over 363/EUR on Friday could be the portent of further selling as the MNB prepares to drop interest rates for a second consecutive meeting."
"Higher energy prices have not helped the case of the forint but it’s realty the divergence in monetary policy that caused the forint to fall behind."
"Compared to the lower rates in Hungary, money markets are discounting a higher/ stable path for Czech and Poland over the next six months."
"A 25bp cut by the MNB to 5.75% is widely anticipated tomorrow and erode the carry appeal of the currency."
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