At yesterday’s Hungarian National Bank meeting, the interest rate remained unchanged at 6.50% as expected. ING’s FX František Taborski said the central bank responded with hawkish comments, but tried to avoid commenting on the rate hike, which came up during the Q&A session.
Markets could benefit from widening interest rate differentials
“NBH appears to have done everything possible while avoiding extreme scenarios in the current environment. The market also saw this and took a hawkish lead to test the 400 EUR/HUF again. However, the 400-402 HUF range is likely to stay here. Of course, after the NBH meeting, the focus will return to global talk and the HUF is no longer under central bank control. This will be an important variable in determining the duration of the pause and the likelihood of a return to interest rate cut discussions.
“Paradoxically, the future will mainly depend on the outcome of the US election. However, the relief if Harris wins will be more pronounced for PLN and CZK. Overall, the HUF will face challenges in the coming weeks. We may have found a range, but we are not out of the crisis yet and there are no signs of calming down in the coming weeks. HF’s recovery will therefore take longer and will depend primarily on global trends. Masu.”
“Yields look attractive after the decline, but on the other hand, markets will remain risk-averse at least until the outcome of the US presidential election is known. On the currency front, in calm conditions, markets could benefit from a significant widening of interest rate spreads. CZK showed some gains yesterday and remains our favorite currency within the Central and Eastern Europe (CEE) region, and we believe CZK has the potential to outperform its CEE peers in the current environment. I’m thinking. ”
