The US dollar is lower against the Hungarian forint on Friday morning, failing to build on gains made earlier in the week since both the National Bank of Hungary and the US Federal Reserve left interest rates unchanged.
USD/HUF was lower by 28 pips (-0.09%) to 305.00 with a daily range of 304.84 to 306.16 as of 10am GMT. The currency pair stalled for a fourth time this week at the 307 level, near record highs but subsequently dropped 200 pips below 305, to leave it nearly flat for the week.
The movement across currencies markets, particularly as it related to what are perceived to be ‘haven’ and ‘risky’ currencies continues to be dominated by the coronavirus outbreak in Wuhan China. The forint is seen at the risker end of the scale but on Friday is finding some buyers after the market failed to build on gains above 307 to the dollar. The forint is pulling back from record lows against the euro, and close to record lows against the dollar after a swap tender on Monday.
Some of this demand for the forint is explained by action in Hungarian debt markets. On Thursday, the Government Debt Management Agency (AKK) sold 80 billion HUF in bonds at an auction. That was 25 bn higher than had been originally offered because of strong investor demand. Sometimes before investing in government debt, an investor must convert their local currency into the national currency of the government issuer, increasing demand for the currency.
On Tuesday the National Bank of Hungary left interest rates unchanged with little in the way of forward guidance to indicate which direction they might be headed. On the other hand, the Federal Reserve left interest rates unchanged but at the same time gave hints that investors are interpreting as meaning the next move in rates could be lower.
Despite the Fed’s dovish stance and mixed economic data releases, the dollar has been demand as a haven asset amid the coronavirus outbreak. Next week, the biggest datapoint of the month, US unemployment figures are released.
