Lower EUR/HUF is good news for the NBH – ING

FXStreet Insights Team FXStreet

The National Bank of Hungary will meet next Tuesday, giving the Hungarian Forint (HUF) more market attention than usual. Economists at ING analyze EUR/HUF outlook.

A stronger US Dollar is not good news for HUF and the CEE region

The Minister for Economy is proposing a change in the money market rate BUBOR which would be replaced by T-bills yields for corporate loans pricing. For now, this is just a proposal but it triggered an exchange between the minister and the central bank, which contributed to higher EUR/HUF volatility on Thursday.

Looking ahead, lower EUR/HUF is good news for the central bank, and it may increase the pace of rate cuts to 100 bps next week (which is now our baseline view).

The interest rate differential has turned up in favour of HUF in the last two days, which should stop the recent sell-off. However, the situation reads poorly in the current environment and a stronger US Dollar after Thursday is not good news for HUF and the CEE region.

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