HUF: Cabinet Shake Up, Speculation Over Next NBH Governor Weighs on HUF

EURHUF gained as much as 0.3% at the start of the session, rising to 395 and matching last week’s highs following comments from Prime Minister Orban over the weekend. While the cross has since moderated from its best levels, the forint still lags its CE3 counterparts as markets continue to scrutinise the implications of the potential appointment of either Varga or Nagy as the next central bank governor.

• Orban said the combination of the finance and economy portfolios will create the position of a “super-ministry,” suggesting that Finance Minister Mihaly Varga or Economy Minister Marton Nagy may succeed Governor Gyorgy Matolcsy after his mandate expires on March 1. He said, “one will be the top minister for the economy, the other will be central bank governor.”
• Local news site Portfolio run a piece in which they argue that while Varga’s appointment as head of the NBH is unlikely to unsettle markets, Nagy's expanded mandate over fiscal policy and debt management could draw significant attention. Bloomberg note that while Varga is seen by investors as a more restrained policymaker, he’s overseen successive years when the budget deficit overshot.
• For EURHUF, initial resistance is unchanged at 396.06, the Aug 16 high. Clearance of this level would highlight a bullish reversal, while a breach of the Aug 21 low of 391.93 on the downside is required to reinstate a bearish threat.