Hungarian S&P Credit Outlook Stable—BB
- S&P Affirms Double-B Sovereign Credit Rating
- €21.9 Billion Partnership Agreement with EU Boosts Recovery
- HUF Likely to Trade Based on US Interest Rate Changes
Standard & Poor’s affirmed Hungary’s double-B sovereign credit rating. The financial services company felt that any political risks to Hungary’s creditworthiness were offset equally by an improved economic outlook.
The decision by Hungary’s central bank to lower rates over the past two years from 7.0% to 2.1% has helped the economy recover, posting an expected growth rate of 3%-- a level not seen since 2007. The economy has further benefited from a €21.9 billion partnership agreement with the European Union. Under this agreement, aid will be dispersed through 2020 to advance the competitive presence of key industries including the agriculture and maritime sectors. Furthermore, as the economy settles, and growth rates slow to 1-1.5% Hungary is still expected to have the external financing capacity to cover their current account deficit.
With a balanced economic outlook and unchanged credit rating the USD/HUF will likely trade between the 240-250 support/resistance range and in step with US interest rate expectations.
Graph Created By Jeremy Wagner Using MarketScope 2.0
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