The upcoming meeting of the National Bank of Hungary next Tuesday is drawing more attention to the Hungarian Forint (HUF), according to analysts at ING who analyze the EUR/HUF outlook.

The current stronger US Dollar poses challenges for the HUF and the Central and Eastern European (CEE) region. Meanwhile, a proposal by the Minister for Economy to change the money market rate BUBOR, replacing it with T-bills yields for corporate loans pricing, triggered discussions with the central bank. This exchange contributed to increased volatility in the EUR/HUF on Thursday.

Looking forward, a lower EUR/HUF is seen as positive news for the central bank, potentially leading to an acceleration of rate cuts to 100 basis points next week, now considered as the baseline view. The interest rate differential has recently shifted in favor of the HUF, potentially putting a halt to the recent sell-off. However, given the current global environment and the impact of a stronger US Dollar observed on Thursday, there are concerns about the outlook for the HUF and the broader CEE region.