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EURHUF Trading Slightly Lower Following NBH Hike

HUNGARY
  • Yesterday, NBH raised its 1W depo rate to 4%, up from 3.8% the previous week.
  • The 1W depo rate could be raised up to 4.5% in early 2022 as the HUF weakness could prolong the NBH tightening cycle, ‘pressuring’ policymakers to increase the terminal rate.
  • As a reminder, weakening HUF keeps supporting inflation expectations and therefore increases inflation risks in the near term, which was called a ‘public enemy’ by Hungarian policymakers.
  • EURHUF has been consolidating lower following the NBH decision, and is currently trading slightly below the 369 level. ST support to watch on the downside stands at 365.70 (50DMA).

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