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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EM FX
- Despite the sharp rebound in CEE FX generated by the 'slight improvements' in the Russia/Ukraine conflict two weeks ago, CEE currencies continue to trade significantly below their 'fundamental' value.
- The chart below ranks the major G10 and CEE currencies based on their percentage difference between the current spot rate and their 'fair' value, which we define using a Behavioral Equilibrium Exchange Rate (BEER) model (using terms of trade, inflation and 10y interest rate differentials as explanatory variables).
- The HUF remains currently the most ‘undervalued’ currency against the USD among the G10/CEE world (nearly -22.5%). and therefore should continue to appreciate in the short term if market optimism gradually recovers.
- Hence, additional hikes on the 1W depo rate tomorrow will not have much of an impact on the forint, which is why the NBH could keep its 'effective' rate unchanged at 5.85% against this week.
Source: Bloomberg/MNI
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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