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Government Considering Asking ECB to Allow NBH to Operate with Negative Equity

HUNGARY
  • The government is reportedly considering asking the ECB to allow the NBH to operate with negative equity after soaring interest rates look set to plunge the central bank into a record loss, according to intellinews.com. Prime Minister Orban’s government would like to avoid recapitalising the NBH as it struggles to close a huge budget deficit after already amending the rules for compensating the central bank's losses, allowing a five-year period to cover them.
  • EURHUF has pared overnight gains - which took the cross to a high of 371.84 - and now sits marginally in the red below the 371.00 handle. The pair’s technical conditions remain bearish with sights still on key support at 367.59 – the June 12 low and bear trigger.
  • The debt agency is set to offer a total of HUF35bln in government bonds at an auction at 1000BST/1100 CET.
  • There are no major data releases scheduled for today. PPI data is on the docket tomorrow morning.

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