Hungarian forint firms as concerns over EU funds ease

The Hungarian forint firmed slightly on Monday, adding to its gains from the previous session, as investors' concerns over negotiations between Hungary and the European Union over funds subsided.

The forint EURHUF was up 0.21% and trading at 408.10 versus the euro. Last week, the Hungarian currency was on a rollercoaster and fell as much as 415 as the unit was weighed down by media reports that the European Commission was going to withhold funding for Budapest due to concerns over the rule of law.

"It seems like the market has calmed down a bit after negative news about EU funds last week," an FX trader in Budapest said.

A deal with the European Union on funds is required for a significant strengthening of the forint, traders and analysts have said. The currency is central Europe's worst performer so far this year and has shed almost 10%.

The European Commission is likely to approve Hungary's post-pandemic recovery plan this week to keep open the possibility of EU disbursements later, but hold back any payouts until Budapest fulfils all agreed conditions, sources at the EU executive have said. nL8N32K30C

Long-term Hungarian bond yields were unmoved on Monday, a fixed-income trader said.

The yield on the benchmark 10-year bond was about 8.05%.

In Hungary, data showed on Monday that business sentiment continued to worsen in November while consumer confidence improved slightly, with both measures remaining near dismal levels last seen during the pandemic.

Elsewhere, the Polish zloty EURPLN was up 0.21% and trading at 4.6800 versus the common currency.

The zloty would continue to stabilize around the 4.7 level, Alior Bank wrote in a note, as it was "still benefiting from relatively favorable moods in the global markets."

Investors also eyed a flash inflation reading for November and third-quarter GDP estimates were due on Wednesday.

Stocks in the region were mixed, with Warsaw GPW sliding 0.92%, while Budapest BUX added 0.25%.