The forint has gained pace in recent days, but this trend began in September, Napi Gazdasag writes, citing analysts, who named four factors behind the rally.

The main reason was investors’ confidence following the government’s verbal commitment to keeping the 3% budget deficit target for 2011. Another was the depreciation of the dollar, as the US Federal reserve announced new quantitative easing; boosting dollar liquidity and making higher yielding assets, such as the forint, more attractive for risk-taking investors.

In addition, the cost of insurance against Hungary’s default has sunk below 300 basis points for the first time since June. Another factor has been investors backing the forint’s fall unwinding some of their positions.

Analysts told Napi Gazdasag that details on the 2011 budget will be key to the future of the forint, but added that they see a correction approaching and range-bound trading in the next few weeks."

Source: Hungary Around the Clock.

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