25 Aug 2015
NBH to remain on hold for a long period – TDS
FXStreet (Edinburgh) - Cristian Maggio, Head of EM Strategy at TD Securities, sees the Hungarian central bank staying put for the time being.
Key Quotes
“The NBH left the base rate unchanged at 1.35% today after cutting rates a last time in July. This was widely anticipated by consensus and was in line with our forecast. So no surprise on this front. So if you try to link today’s moves in EURHUF to the rate decision, I think you should be looking elsewhere”.
“The NBH mentioned ‘volatile’ sentiment in global markets, but they also noted that this ‘has had little impact’ domestically. The forint has been fluctuating against the euro ‘within a narrow range,’ while CDS and long-term govies have been broadly unchanged since the last decision”.
“In other words, we continue to expect rates to remain on hold for a long period of time. The HUF was already pricing in all of this. The moves we saw today have nothing to do with the rate announcement. Rather we saw money managers adjusting portfolios after the abrupt moves broadly recorded in EMs in the past few days. With EUR on a weaker footing today, this seems the most likely catalyst, which has by the way brought PLNHUF in line with the prevailing levels from last week at around 74.40”.
Key Quotes
“The NBH left the base rate unchanged at 1.35% today after cutting rates a last time in July. This was widely anticipated by consensus and was in line with our forecast. So no surprise on this front. So if you try to link today’s moves in EURHUF to the rate decision, I think you should be looking elsewhere”.
“The NBH mentioned ‘volatile’ sentiment in global markets, but they also noted that this ‘has had little impact’ domestically. The forint has been fluctuating against the euro ‘within a narrow range,’ while CDS and long-term govies have been broadly unchanged since the last decision”.
“In other words, we continue to expect rates to remain on hold for a long period of time. The HUF was already pricing in all of this. The moves we saw today have nothing to do with the rate announcement. Rather we saw money managers adjusting portfolios after the abrupt moves broadly recorded in EMs in the past few days. With EUR on a weaker footing today, this seems the most likely catalyst, which has by the way brought PLNHUF in line with the prevailing levels from last week at around 74.40”.