The US dollar is down against the Hungarian forint on Friday in a modest recovery for the forint at the end of a volatile week that has seen markets grapple with record lows and verbal interventions from the National Bank of Hungary.
USD/HUF was lower by 104 pips (-0.33%) to 312.53 with a daily range of 311.97 to 313.83 as of 12pm GMT.
USD/HUF fell over 100 points at the beginning of the European session before stabilising near 312. The daily losses leave a gain of +0.87% on the week.
The Hungarian forint
Market sentiment is a little unsettled from a rise in the number of coronavirus cases in China and nearby countries, and that is hurting demand for riskier currencies like the forint. Central and Eastern European stock markets were mostly lower but global losses this week have been limited by promises of policy stimulus from China.
The forint has strengthened even as BUBOR rates, the interest on interbank loans in Hungary settled at more normal levels. Some dealers had seemingly overinterpreted the recent comments on inflation from the NBH, thinking a rate hike would be possible. Consensus economist opinions for the interest-rate setting meeting next week on Feb 25 are for rates to remain on hold. But comments on inflation in the accompanying statement will be closely watch for any shift that implies any plan to tackle inflation in Hungary now running at 4.7%.
Some positive surprises in economic data from the Eurozone has slightly dented demand for dollar on Friday after a strong week. Part of the allure of the dollar has been the dismal economic performance in other developed economies especially Germany and the Eurozone. German manufacturing activity saw a surprise rebound in February to the highest since February 2019. Although a figure below 50 means it is in contraction, it was a big positive surprise.
The better data out of Europe saw the Dollar Index, a measure of the dollar against a basket of currencies back off from the widely watched 100 level. It would be the first time at the level since April 2017.