Investors should buy the forint and sell the koruna as Hungary’s currency is likely to strengthen against the Czech Republic’s on central bank support, DZ Bank AG said.
The koruna may depreciate to 8.80 per 100 forint in two weeks, Felix Herrmann, a Frankfurt-based economist at DZ Bank, wrote in a research report today. The koruna was little changed at 8.3748 per forint by 5:27 p.m. in Prague.
“Further downward potential for the forint against the koruna is very limited since the Hungarian central bank decided to prevent the euro-forint pair from climbing above 300,” Herrmann wrote.
The Magyar Nemzeti Bank has allowed lenders to access the central bank’s foreign-currency reserve from this month to help offset losses from a law allowing foreign-currency mortgage holders to repay their loans below-market exchange rates. The central bank likely prevented a speculative attack against the forint by opening up the reserves, Governor Andras Simor said in an interview on public television M1 late yesterday.
The prospect of Hungarian policy makers increasing interest rates may give further support to the forint, according to Herrmann.
Hungarian policy makers last month kept the benchmark interest rate unchanged at 6 percent for an eighth month after considering a 25 basis-point increase.
The Czech central bank, whose main interest rate is at a record-low 0.75 percent, “doesn’t prefer” to influence the koruna directly on the foreign-exchange market and would conduct such operations only in case of “extraordinary” currency moves, Governor Miroslav Singer said today in an online interview on the Prague-based Patria.cz news website.
The koruna is poised to extend losses against the euro as the central bank may cut interest rates and weaken the Czech currency to curb a slowdown in the export-oriented economy, Michal Dybula and Bartosz Pawlowski, strategists at BNP Paribas SA in Warsaw and London, respectively, said in an e-mailed report today.
Strategists at Societe Generale SA and UniCredit SpA last week also said the koruna may underperform regional peers as the central bank is unlikely to support the currency.
The forint depreciated 0.6 percent against the euro to 298.10 for a fourth day of losses, extending its slide in the second half of the year to 11 percent. The koruna weakened 0.5 percent to 24.954 against the European common currency.