Citi's Recent Trade#
Citigroup strategists announced that they are taking profits from a long position in the Hungarian forint against the Czech koruna. This trade was executed using financial contracts known as forwards, which allow investors to lock in exchange rates for future transactions.
Profit Realization#
The bank reported a total return of 1.3% on this trade since it was initiated on April 27. Strategists Luis Costa and Bhumika Gupta highlighted this successful outcome in a recent note.
Positive Outlook for the Forint#
Despite taking profits, Citi maintains a positive outlook on the forint. They believe that if international energy prices continue to decrease, the forint could strengthen further. Under favorable conditions, they suggest that the exchange rate between the euro and the forint (EUR/HUF) might drop below 350.
Future Catalysts#
Citi also mentioned that the incoming Tisza government’s efforts to regain access to European Union funds by the August deadline could lead to another rally in forint assets. This potential development could further enhance the forint's value in the market.