Forint gains after Fitch lifts Hungary's outlook

The forint led currency gains in emerging Europe on Monday after Fitch lifted its outlook for Hungary, while the euro held firm against the dollar to boost risk appetite.

Credit ratings agency Fitch late on Friday revised its outlook on Hungary to "stable" from "negative", citing a reduction in macroeconomic imbalances driven by improved coherence between fiscal and monetary policies.

Fitch said the National Bank of Hungary (MNB) has maintained a tight monetary policy stance, while the government has taken steps to reduce the primary deficit since 2023. The rating agency forecasts a gradual economic recovery for Hungary, driven by stronger private consumption, investment and exports.

By 1005 GMT the Hungarian forint EURHUF was up 0.8% against the euro at 411.20, after touching 410.85, its strongest since late November, in early trading.

A Budapest trader said they believed the forint could firm to 410 or further, calling the currency's time around 415 "really unjustified".

"We hope (Fitch's surprise move) can push the forint towards strengthening so that it can firm alongside the zloty and the crown finally, because the forint has been lagging behind significantly," the trader said.

The Polish zloty EURPLN was up 0.2% at 4.2585 per euro, near its strongest levels since late September, continuing to gain after the National Bank of Poland held rates for the 13th time in a row last week with Governor Adam Glapinski pushing the prospect of rate cuts beyond 2025.

"The change towards hawkishness, although uncertain and probably not lasting, supports our currency," ING BSK analysts wrote, adding that technical analysis suggests a possible appreciation of the zloty towards 4.24.

"The restrictive stance of the MPC combined with the dovish stance of the ECB will support the zloty in the coming weeks," they said.

Polish rate-setter Przemyslaw Litwiniuk said on Monday that conditions for rate easing could still appear in the second half of 2025.

The Czech crown EURCZK was steady at 25.0980 per euro, near its highest levels since late September.

In comments published on Monday, Czech central bank board member Karina Kubelkova said the bank will maintain a "very strict" policy and be cautious when considering any further interest rate cuts.