The forint is hovering around 276.50 to the euro, slightly stronger than late on Monday. The HUF has gained over 1% compared to its lowest on Monday (279.50).

The engine of the HUF’s strength is fuelled by the favourable global mood. US stock indices managed to swing to the positive side by closing yesterday, while the euro has also stabilised versus the US dollar, albeit it is still at a four-year low.

The euro’s strengthening potential is kept under pressure by the ever gloomier economic outlook on the euro zone. Analysts have warned that the launch of austerity measures could cause a rebound in the area’s growth and lead to a W-shaped recession. In a bid to alleviate such fears, euro zone finance ministers decided yesterday that EMU member states should consolidate their fiscal balances according to their capacities.

"The efforts should be differentiated among member states according to their fiscal space and other vulnerabilities," said EU Monetary Affairs Commissioner Olli Rehn.

He warned against a uniform acceleration of consolidation, saying that would "risk depressing economic growth and harm the recovery currently under way."

Source: Portfolio Online Financial Journal