BUDAPEST: The Hungarian forint edged down in thin trade, underperforming its Central European peers, while stocks firmed on Monday after Prime Minister Viktor Orban’s Fidesz party won a fourth consecutive electoral victory.
Orban scored another landslide win in Sunday’s election, as voters endorsed his ambition of a conservative, “illiberal” state and shrugged off concerns over Budapest’s close ties with Moscow.
Following Orban’s victory, markets expected an end to uncertainty around the future of economic policy, possibly helping the forint. Its slide on Monday was not significant, since the rate could move easily in low trade volumes, FX traders in Budapest said.
The Hungarian forint was down 0.11%, trading at 368.77 per euro. Hungarian government bond yields were stable, with the yield on the 10-year bond around 6.06%, a fixed-income trader said.
“There are no big moves in the forint’s market because this election result means that everything remains the same; there will not be an uncertain period,” an FX trader in Budapest said.
Crown gains after rate hike, forint stronger before election
“Obviously, economic policy will have to be modified sooner or later, but the market is not yet pricing that in.”
Orban’s new term faces tough challenges domestically, with the central bank projecting economic growth at the slowest rate in any election year since he came to power in 2010 and with inflation heading toward its highest rate in at least 15 years.
The Czech crown was up 0.1% and trading at 24.350 per euro.
The Polish zloty firmed 0.17% to 4.6360 per euro.
The Romanian leu edged up 0.05% to 4.9426 to the euro as investors eyed a meeting of the central bank, the National Bank of Romania (NBR), to be held on Tuesday.
A Reuters poll of analysts forecast a 50-basis-point rise in the NBR’s policy interest rate to 3%.
“We see two more hikes of 25bp each by the NBR to 3.50% by mid-year, with the credit facility, which should remain the relevant operational instrument under firm liquidity control policy, reaching 4.50%,” Erste Group wrote in a note.
Stocks in the region were mixed, with Budapest adding 0.66%. Warsaw 0.22% lower and Bucharest up 0.3%. Prague eased 0.27%.
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