The outcome of general elections in Poland and a favourable IMF decision concerning Romania brought moderate optimism to the trading floor on Monday morning, however this trend petered out by midday and the rest of the day saw minor fluctuations only. EUR/HUF quotes were typically in the range of 284.50-286. The forint was traded at 214-215 vs. the Swiss franc and at 227-228.50 vs. the US dollar.

Neither a statement by Economy Minister György Matolcsy who warned that Hungary may have reached nearly 120% of its 2010 deficit target by mid-year, nor a Monetary Council note expressing concern over the impacts of the bank tax had any noticeable market effects. A European Central Bank statement opened a new chapter of conflicts between the National Bank of Hungary and the new government, which declared government involvement in payroll issues at the Romanian Central Bank were unacceptable.

Contrary to its stable behaviour on many more turbulent days in the past, the Czech koruna suddenly gathered speed vs. the euro, firming by approximately 0.5% despite Monday’s bank holiday. The chart below shows the region’s currencies vs. the euro starting on Monday morning.

The secondary government bond market saw a minor decline in yields. According to early afternoon data supplied by the State Debt Management Centre, benchmark yields dropped 1 to 5 basis points for various tenors."

Source: Portfolio Online Financial Journal