Free Trial

NBH Tightening 'Pause' Leaves HUF Vulnerable

HUNGARY
  • Since the start of year, we have seen that the NBH decided to mark a pause in its tightening cycle, leaving the 1W depo rate unchanged at 4% after raising it by 220bps in the last two months of 2021.
  • The aggressive consecutive hikes in the end of last year led to a sharp appreciation of the HUF in the first half of January, which was the best performing currency among the EM world, up over 5% against the Euro.
  • However, it seems that traders have been disappointed by the NBH's decision to pause its tightening cycle; the forint has been consolidating against major crosses in the past week.
  • Some participants have been pricing in a terminal rate closer to 4.5%, therefore a lower-than-expected terminal rate could result in some HUF depreciation.
  • Next decision will take place tomorrow (8.30am London time) and policymakers are expected to maintain the 1W depo rate unchanged at 4%.

To read the full story

Close

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.