9:55

Hungary’s forint has barely caught its breath when sellers took the floor and the HUF eased to 277.70 from around 276 by around 10:00 CET on the interbank market.

The moving force behind the HUF’s depreciation remains the US dollar’s strengthening on the world market that is linked to the gloomy global investor mood. In times like this investors seek risk-free assets for their money. Southern European stock indices are already down by about 2.5%.

The source of concerns remains sovereign debts and how SE countries will be able to finance these. It has become clear since Tuesday that the decision to throw an international lifebelt to Greece failed to ease jitters. Moreover, concerns about the Greek debt have begun to fuel worries about the debts of Portugal, Spain and Italy, as well.

The HUF is currently quoted at around 214 to the USD and 194 vs. the Swiss franc on the interbank market.

08:37

The HUF has not been this weak versus the single European currency since end-December 2009. It has been briefly quoted even at 276.50 and was around 276 at 08:35 CET on the interbank market.

As you can see from the chart below, the HUF depreciated in tandem with Poland’s zloty and their easing was almost exactly as strong as the dollar’s gain against the euro. The greenback has firmed to around 1.2950 to the EUR today, which marks a 12-m strongest for the USD. The USD gained some 3% to the EUR since Monday, while the HUF and the PLN eased by about that much.

European stocks futures indices are up 0.3%, which indicates that the decline on the markets may not continue in Europe. Meanwhile, the USD has given back some vs. the EUR and is approaching 1.30. This implies a moderate improvement in market sentiment, but we should expect no rally on European stock, bond and FX markets after the past few days’ plummets."

Source: Portfolio Online Financial Journal