Trend for EUR/HUF

[dorf]

Any of you guys got an opinion about the trend for EUR/HUF? Base rate for HUF is evidently 12% at present.

 

[JonnyT]

Never heard of the Huf

Hungarian Franc?

I would wager it has a big spread if you can trade it!

JonnyT

 

[gregrickards]

Gr

The market priced in a 100bp cut earlier in the week which failed to materilise, It is a currency that you should be weary of, the government goes through stages of trying to defend the currency, and then letting it run... at the moment they are happy in the 245/55 eur/huf range but don't hold your breath, the 100bp has probably just been delayed.

 

[dorf]

The market priced in a 100bp cut earlier in the week which failed to materilise, It is a currency that you should be weary of, the government goes through stages of trying to defend the currency, and then letting it run... at the moment they are happy in the 245/55 eur/huf range but don't hold your breath, the 100bp has probably just been delayed.

Well I take your points. The HUF is actually the Hungrarian Forint. I am not looking for a spread trade. In fact I am looking for a real trade, since I got caught out in real Euros some while ago and am looking at trying to improve yield over a period, since the Euro base rate is relatively low.

The realities of spread trading and real cross currency fund movements do not seem to be entirely the same. I am trying to understand how these exactly work. Base interest rates clearly play a part, since there is a tendency for investors to move funds across currencies to get the yield from a higher interest rate. For example the prospect of the GBP having an increased base interest rate today has caused an increase in the value of the GBP, but if that expectation is not realised the value of the GBP will probably fall off a bit tomorrow. However, it seems to me that against many other economic realities the GBP is and has been significantly over-valued for some time. Correction will eventually take place in the longer term I imagine. The gradual decline in North Sea oil reserves, the ballooning UK balance of payments deficit, the increasing internal UK budget deficit, the increasing level of real personal and corporate debt, the increasingly probable house price crash, the increasing difficulty of exporting with a high exchange rate, etc. must all have an effect eventually?

So has any one got a view please on a good medium term currency which is not likely to weaken too much, but has a relatively high current base rate? At the end of the day it is the combination of both which determines yield when converted back into say GBP over a period.