By Anita Komuves
BUDAPEST, Aug 25 (Reuters) - The Hungarian forint rebounded against the euro in late Tuesday trade after a top Hungarian central banker reiterated that there was no room to cut short-term rates any further.
At its meeting earlier on Tuesday, Hungary's central bank left its base rate unchanged at 0.6%, as expected, and announced that it would increase the amount of its weekly government bond purchases.
Bond yields were unchanged immediately after the announcement, a fixed income trader said in Budapest.
The forint EURHUF= reached a one-month low, trading 0.6% lower against the euro at around 354 after the meeting.
However, it rebounded to 352.22 by 1433 GMT, after deputy Governor Barnabas Virag told an online briefing the bank has no room to cut short-term rates further. nS8N2DB0AA
The central bank, which cut its base rate in June and July, said in a statement after the rate decision that it expects the disinflationary effects of the coronavirus pandemic to rein in price growth over its monetary policy horizon.
Markets were closely watching the bank's comments on higher-than-expected inflation and economic recovery as inflation came in at an annual 3.8% in July and GDP dropped by 13.6% year-on-year in the second-quarter.
"If the central bank were to sound more dovish, the downward trend in HUF might continue in the near future," Commerzbank wrote before the decision.
Elsewhere, the zloty EURPLN= and the Czech crown EURCZK= were stable.
"The Czech koruna is currently trading close to our target of EUR/CZK 26.0 for the end of the year," Raiffeisen said.
However, it is "not going to appreciate to the levels we (saw) before the pandemic shock ... The interest rate differential with the euro area declined significantly."
AT 1633 CET
Note: daily change
Note: FRA quotes
are for ask prices
(Additional reporting by Jason Hovet in Prague Editing by Susan Fenton)
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