The Hungarian forint was traded at 310.30 to the euro around 10 on Monday morning, firming from 311.58 late Friday on news of a deal reached between Greece and its creditors after negotiations that lasted through the night. The Hungarian unit weakened to 279.74 from 278.78 against the dollar, but strengthened to 295.68 from 296.56 against the Swiss franc. Meanwhile, the Budapest BUX share index was up 0.30% at 22,130.52 at noon on Monday, after euro-zone leaders reached an agreement with Greece on a third bailout package for the country.
Hungary’s currency is likely to firm in the medium term, local Takarékbank said in a note last week after the result of the Greek referendum exerted downward pressure on the forint. Hungary’s direct linkage with Greece is negligible while the Hungarian economy’s performance is robust, its trade and current account surpluses are huge, public debt and external debt are on a declining path, and its sovereign debt ratings are expected to be upgraded back to investment grade in the coming months, analysts of Takarékbank explained.
Meanwhile rating agency Moody’s has left Hungary’s “Ba1” sovereign long term foreign and domestic issuer rating, one notch under investment grade, with “stable” outlook, untouched in a scheduled review on Friday despite most analysts had expected an outlook upgrade to “positive”. Economy Minister Mihály Varga said in an interview earlier that based on its recent results Hungary “deserves” either a positive outlook or even an upgrade.
On May 22, Fitch Ratings affirmed Hungary’s “BB plus” sovereign credit rating, also one notch below investment grade but raised the outlook on the rating to “positive” from “stable”, citing a small but steady decline in government debt, the planned cut in the special bank levy in Hungary next year and the conversion of household forex mortgages to forint debt. On March 20, Standard & Poor’s Ratings Services raised Hungary’s sovereign credit rating to “BB plus” with “stable” outlook—bringing it in line with Fitch’s and Moody’s rating. Published schedules show Moody’s will review Hungary on Nov. 6, S&P on Sept. 18, while Fitch will follow suit on Nov. 20.
via hungarymatters.hu and MTI photo: Hungary Today