HUF: Markets are looking for new impetus - ING

As anticipated, yesterday's meeting of the National Bank of Hungary did not introduce any significant new developments, ING's FX analyst Chris Turner notes.

EUR/HUF doesn't have much momentum to test lower level

"The central bank confirmed rates at 6.50% and a hawkish tone. However, the market's attention was caught by the decision to cut the required reserve ratio from 10% to 8%. This decision only offsets the expiring liquidity in the market from previous facilities. Thus, overall, the amount of liquidity should remain unchanged."

"However, the central bank's decision implies some activity in preventing more tightening, which the market sees as dovish if anything. Although rates remained 1-2bp higher at the end of the day, we saw more upward pressure before the meeting, while the rest of the CEE region ended lower yesterday."

"EUR/HUF didn't see much enthusiasm yesterday and remained almost unchanged despite more volatility in the rest of the CEE region. As we discussed here before, we have been neutral on HUF since early July despite the bullish stance of the market. Although carry with lower volatility may look attractive here, we believe EUR/HUF does not have much momentum to test lower levels and the 399-400 range should work in the days ahead."