Economists at Credit Suisse remain cautiously bullish on the Hungarian forint against the euro as they think investors will increasingly come to expect further rate hikes from the central bank. A return in EUR/HUF to a range of 350-355 seems on the cards.
Key quotes
“We remain cautiously bullish on the forint against the euro. We think investors will increasingly find it probable that the central bank will hike rates further after surprising markets with a policy rate hike on 26 September. The central bank decided on Tuesday, October 6 to allow more flexibility to its QEs operation. We see that decision as a sign that it aims to support the economy via QE while retaining an ability to use the policy rate as a tool to support the currency and/or prevent an overshoot in inflation. We expect this central bank’s strategy to keep EUR/HUF upside in check for now.”
“Furthermore, if the global environment in the weeks ahead is generally supportive for the EM currency complex, EUR/HUF will fall back to the middle of its post-COVID-crisis range, in our view – i.e. to the 350-355 area.”
Share
