Central European Daily

Last week’s HUF strengthening turns out to be a temporary correction as HUF weakens vs. developed market currencies again. The EUR/HUF pair increased to 311 yesterday and rose further this morning. There have been several issues that make the Hungarian forex market nervous. First, the local banking sector awaits key rulings regarding the FX mortgage relief scheme. The respective decisions should be declared by the European Court of Justice and by the Hungarian Supreme Court. Secondly, markets have begun to fear that the NBH´s monetary policy becomes too relaxed and the central bank could ease it further even if external environment (in emerging markets) worsened again. Moreover, the NBH research shows that the central bank has been more tolerant to HUF weakening now than it used to be in the past.