Hungarian forint, MOL shares rebound after fuel price cap scrapped

The Hungarian forint rose on Friday against the euro a day after hitting a seven-week low while energy company MOL MOL rebounded as markets assessed the impact of the government scrapping a fuel price cap amid a shortage of supplies.

The forint was supported by hopes that a European Commission analysis on government measures could lead to a decision to unlock funds. However, Morgan Stanley said in a research note that uncertainty over possible disbursements remained very high.

Hungarian assets have been under siege this year as disputes with the European Commission froze EU fund payments, while the inflation rate accelerated even after the central bank signalled an end to its rate-hike cycle.

Inflationary pressures were compounded earlier this week when the government lifted a year-long price cap on car fuels and more than doubled a windfall tax on oil companies.

The tax hike could cost MOL an additional 200 billion forints ($508.88 million) if the Ural-Brent spread remains at $25, and if 70% of the crude processed in the company's Danube refinery continues to come from Russia, Tamas Pletser from Erste Investment said.

"The scrapping of the fuel price cap could bring in more than that, about 250 billion-300 billion forints," he said. "That means that this could be positive for MOL after all."

By 0940 GMT, the Hungarian forint EURHUF was up 0.6% against the euro at 415.5500, while MOL shares were up 1.92%, outperforming the blue-chip index BUX.

Elsewhere in the region, the Czech crown EURCZK was down 0.1% against the euro. The Polish zloty EURPLN edged 0.1% higher, a day after the central bank stood pat on interest rates. Governor Adam Glapinski said the bank had not formally ended its hiking cycle yet, mirroring similar comments by Czech central bankers.

"This particular commitment appears to help currencies noticeably at this time," Commerzbank said in a note.

The Romanian leu EURRON was down 0.1% versus the euro, after Romania was kept outof Europe's border-free Schengen area because of Austrian opposition.

Budapest's blue-chip index BUX led gains in the region with a 1.4% advance, while Bucharest BET and Warsaw GPW climbed 0.4% and 0.3%, respectively. Prague's (.PX) edged 0.1% lower.