The Hungarian Forint got a boost on Friday taking advantage of a weaker US dollar which sold off by week’s end. On the interbank market, during the previous trading week, the HUF appreciated by 0.84% against the greenback and settled at an exchange rate of 295.71 and was seen quoted within a trading range of 296.49 and 294.74.
Meanwhile, in the foreign exchange market, currency traders face an anxious wait as there are risks of another flash crash reminiscent of the one experienced in January 2019. The low liquidity that has engulfed the financial markets over the holiday season is prone to generate wild swing in the currency exchange rates.
Hungary’s central bank kept interest rates on hold at 0.9% at its latest monetary policy meeting. The central bank maintained a dovish stance, but at the same time it raised its GDP forecast for 2020 from 4.5% to 4.9%, and its inflation forecast to 3.5% from 3.4%.
Elsewhere in the EU, the European Central Bank under the lead of the new President Christine Lagarde may now look eager to put an end to its negative interest rate policy. The ECB has lowered the benchmark interest rate to negative 0.5% right before Draghi’s departure.
“If governments want to see a faster exit from unconventional policies, it is in their interests to align with monetary policy,” said Deutsche Bank AG President Karl von Rohr.
Oil prices edged higher, building on the 4rd consecutive week of gains which benefits the petroleum-exporting country. WTI crude oil prices settled at the end of Friday at $61.63 per gallon, registering 1.20% gains.
The spread between 10-year US and 10-year Hungarian bond yields were at 6.2% (6.2 basis points) according to over-the-counter interbank yield quotes for this government bond maturity on December 26th.
The US Dollar Index was down -0.19% to 96.82 in early London trade on Monday. In terms of economic calendar, the United States and Hungary are not scheduled to release any relevant reports today.
USD/HUF continued to consolidate on Monday early trading hours, being down 0.13% to 295.32 in early London hours.