13 Aug 2015
Constructive outlook persists around HUF – BAML
FXStreet (Edinburgh) - Analysts at BAML remain positive on the prospects for the Hungarian forint in the medium term.
Key Quotes
“Monthly data reveal some waning growth momentum, but it is still running at solid levels. We believe growth rates at 3-3.5% this year and next remain within reach”.
“Private consumption and exports should maintain solid trends, as the economy is enjoying several tailwinds (eg, several years of balance sheet repair now over, household debt reduction, FX loan conversion, upcoming personal income and value-added tax cuts, European Central Bank QE)”.
“The National Bank of Hungary cut the policy rate by 15bp to 1.35% and signaled the end of the easing cycle at its 21 July meeting. While this is in line with our long-standing call for the latest easing cycle to total 75bp (see Hungary: it's the economy, stupid), the strong forward guidance from Governor Gyorgy Matolcsy was somewhat of a surprise to the market”.
“We stay long via short RON/HUF and a short PLN/HUF position. The NBH’s decision to end its rate cutting cycle is a significant positive and should help reverse the uptrend in EUR/HUF since 2012”.
Key Quotes
“Monthly data reveal some waning growth momentum, but it is still running at solid levels. We believe growth rates at 3-3.5% this year and next remain within reach”.
“Private consumption and exports should maintain solid trends, as the economy is enjoying several tailwinds (eg, several years of balance sheet repair now over, household debt reduction, FX loan conversion, upcoming personal income and value-added tax cuts, European Central Bank QE)”.
“The National Bank of Hungary cut the policy rate by 15bp to 1.35% and signaled the end of the easing cycle at its 21 July meeting. While this is in line with our long-standing call for the latest easing cycle to total 75bp (see Hungary: it's the economy, stupid), the strong forward guidance from Governor Gyorgy Matolcsy was somewhat of a surprise to the market”.
“We stay long via short RON/HUF and a short PLN/HUF position. The NBH’s decision to end its rate cutting cycle is a significant positive and should help reverse the uptrend in EUR/HUF since 2012”.