Strong HUF supported by current account improvement

EUR-HUF has declined sharply over the past week, hovering around the 300.00 level; this is despite a fresh rate easing cycle just started by the CenBank, which is set to continue.

Part of the strength is due to capital inflow from Euro zone, of course, but domestic drivers are supportive too: external debt has been falling and is set to fall further as Hungary's current account surplus has widened in recent quarters; e.g. yesterday the Q4 2014 current account surplus was reported 20% better y/y.

According to Commerzbank a combination of positive factors are supportive at the moment for the HUF, which means that in the short-term EUR-HUF is likely to continue to linger around the 300 level.