ING’s Frantisek Taborsky notes quiet Central and Eastern European trading, with EUR/PLN and EUR/CZK staying in usual ranges, while EUR/HUF breaks to two-year lows below 377. Taborsky attributes Forint strength to a weaker Dollar, hopes over Ukraine-Russia peace, and Hungary’s relatively high key rate, with cautious National Bank of Hungary guidance seen supporting stability.

EUR/HUF pressured by external and carry

"EUR/HUF remains a different story and yesterday we saw another gap lower with new more than two-year lows below 377. We see the forint benefiting from the external situation of a weaker US dollar and some hopes for a peace agreement between Ukraine and Russia."

"On the domestic side, despite the imminent start of National Bank of Hungary rate cuts, the key rate is currently by far the highest among CEE peers, providing the best carry, after the Czech National Bank and National Bank of Poland delivered most of the cutting cycle."

"At the same time, the rate cut in Q1 is fully priced in and even though Thursday's inflation figures should be weak, we believe the forint should not be significantly damaged."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)