7:59 p.m.

Amid unflagging investor optimism in global markets, the firming of the forint continued at a cautious pace after the closing bell in Europe. The EUR/HUF rate descended as far down as 260.90; the next major resistance is at 260.

4:58 p.m.

EUR/HUF quotes have been stable below 262 in the interbank market for a few hours now. Judging from a benign market sentiment globally (DAX up 1%), we do not expect the currency to weaken this afternoon. From a technical perspective, a market close below the earlier strong supports (264 and 262.50) points to further strengthening. Trader comments have suggested that the currency may even "tackle" the 260 mark in the next few days.

The forint has clearly been the greatest winner vs. the euro among the region’s currencies, evidenced not only by today’s trading data but also throughout the past week.

Looking 12 months back to the turnaround point which marked the regained strength of regional currencies vs. the euro, the Polish zloty has been the biggest gainer in the CEE region in relative performance to, the forint is a close second.

In relation to the US dollar and the Swiss franc, the forint is quoted slightly above 190 and 180, respectively.

Investor sentiment in the secondary government bond market has been also favorable, with yields further down 3 to 8 bp. The benchmark yield of 3-year bonds is currently just above 6%, while 10-year and 15-year bonds yield slightly more than 7%.

1:44 p.m.

For a few moments the EUR/HUF rate was below 262, with the forint peaking at 261.90. The Hungarian currency has not been so strong since December 2008.

Some FX traders in Budapest who spoke with Portfolio.hu put the recent impressive gain of the forint to foreign investors. The general consensus is that major players probably see an opportunity in buying the forint both from the technical point of view and for fundamental reasons as well. Reallocation of funds from some other regional currencies (e.g. Polish zloty, Romanian lei) may have contributed to the quick ascent of the forint.

What is happening in global markets?

Optimism in global stock markets continues to propel emerging market currencies ahead, including those of CEE countries. According to market sources, the key factors contributing to improved risk appetite have been the following:

- Alleviated concerns over Greece (Athens commended on efforts by Standard & Poor yesterday)
- Developed countries’ recent interest rate decisions met favorable welcome by markets
-As reported earlier, the forint’s ascent to new peaks activated speculative investors playing the markets on a technical basis"

Source: Portfolio Online Financial Journal