Forint Lags Peers Amid Few Domestic Catalysts

HUF has underperformed compared to its CE3 peers Thursday, with EURHUF seen trading toward the top end of this week’s range around the 384 level at typing. While broader EM FX is facing headwinds from softer equities and a stronger greenback, the forint sits close to the bottom of the EMEA pile.

• With little in the way of notable domestic developments, HUF has continued its recent trend of being sensitive to shifts in global risk sentiment. As we noted in more detail earlier (https://marketnews.com/mni-nbh-pov-broad-forint-weakness-unlikely-to-deter-nbh-from-expected-easing), this is a trend which could buck in the coming week with the possibility of new forward guidance being offered by the NBH at next week’s MPC meeting as we approach the convergence of the base rate and effective rate.
• Yields across the domestic curve sit 6-9bps lower and steeper, with 3Y bond yields notably at fresh cycle lows. The Budapest Stock index marginally outperformed its regional counterparts and ended the session ~0.5% in the green.