Focus FX - January 17
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17 January 2012 |
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RAIFFEISEN BANK S.A. |
Address
Piaţa Charles de Gaulle, Nr. 15
011857 Bucureşti, Sector 1
Phone
+40-21-306.10.00
+40-21-306.15.54
Fax
+40-21-230.07.00
Website
www.raiffeisen.ro
EUR/HUF
EUR/HUF: 311,0 - 305 (March)
Ever since the U-turn in the Prime Minister’s communication, government officials have been underlining their desire to reach an agreement with the EU/IMF as soon as possible. Thus, most of the risk premium has been priced out. In a massive one-week rally, the forint shrugged off the Fitch downgrade of the Hungarian rating, while the mass downgrade of European countries by S&P had little affect on HUF. We believe that what could be reached by words, has been reached. It now seems that most of the investors trust that the agreement will be signed at some point, but for additional strengthening of Hungarian assets, the government will have to show its determination by deeds. Mr. Fellegi, who is in charge of the EU/IMF talks, met IMF officials last week, and this week a meeting with the European parties is on the agenda. Judging by the previous wording of EU officials, he will get a frosty welcome. Nevertheless, news from the meetings will be the key driver of the exchange rate in the coming days. We would point out that we do not expect a fast agreement, and thus market volatility will be elevated (magnified by the European events). But we forecast that eventually Hungary will sign the agreement – most probably in the first quarter of the year – and thus EUR/HUF will come lower. Our forecast for March is 305.
