ING maintains a bullish outlook on Hungarian assets despite recent sell-offs, forecasting EUR/HUF to stabilize between 350-360 by year-end.
The Hungarian forint fell to 361 against the euro, its weakest level since mid-May, as heavy selling pressure hit Central and Eastern European markets. Elevated oil prices and rising core yields drove CEE rates higher, while crowded long positions and profit-taking exacerbated the decline in Hungarian assets.
Expectations for monetary easing in Hungary have been scaled back to 120 basis points from 150bp earlier, reflecting shifting market sentiment. Poland and the Czech Republic also saw adjustments in rate cut expectations, with Poland’s easing bets reduced to around 20% for the year.
Despite the sell-off, ING views the move as overdone, citing attractive carry and value in Hungarian rates and FX. The bank expects EUR/HUF to trade within a 350-360 range for the remainder of 2024, with stabilization likely after recent volatility.