By Will Peters

Currencies are likely to remain tense after the Fed FOMC result and persisting Emerging Market jitters. Big intraday swings are forecast to persist for the Rand and Forint.

The South African Rand (ZAR) and Hungarian Forint (HUF report below) retain a sharp focus on global foreign exchange rate markets on Thursday; this a day after the South African currency was sent sharply lower against the pound sterling, euro, US dollar and other majors in sympathy with the rest of the Emerging Market complex.

However relief rallies will be seen, as is the case today:

A look at the foreign exchange markets in mid-morning London shows the pound sterling to South African rand exchange rate (GBP/ZAR) is trading 0.32 pct lower at 18.7163. The US dollar to Rand (USD/ZAR) is 0.17 pct higher at 11.3478 while the euro Rand (EUR/ZAR) is 0.21 pct lower at 15.4400.

(PLEASE NOTE: All ZAR and HUF exchange rate quotes are spot market rates. Your bank will affix a spread to these wholesale rates. However, an independent FX provider will guarantee to undercut your bank's offer, thereby delivering you up to 5% more currency for your payments or transfers. Please learn more here.)

While today has seen some pressure come off some of the ZAR crosses, the South African Rand is forecasted to remain under pressure. A UniCredit Bank morning exchange rate forecast brief to clients says:

"With the EM contagion flaring up, the SARB was also forced to hike rates to stem the rand's drop despite CPI is now below the 6% target and activity remains weak. With the new Fed's move, the ZAR will likely be among the most pressured units if the EM sell-off continues."

The SARB hiked the repo rate today by 50bp in contrast to the consensus expectations of 25 economists surveyed by Bloomberg who unanimously forecast that it would stay on hold.

Major concerns for the value of the Rand and South African Policy

In the Q&A session afterwards Governor Marcus also revealed how finely balanced the decision was, by disclosing that two members of the seven-member MPC had disagreed that the repo rate should be raised at all.

Barclays analyst Peter Worthington has expressed concerns as to the difficulty forecasting future rates and Rand exchange rates has become in the wake of yesterday's SARB actions.

"These revelations highlight how difficult it is to call the path of future interest rate movements in South Africa. Have EM currencies adjusted enough already to the reality of the taper and eventual US rate hikes, or will the markets push them still weaker over the coming months? And more idiosyncratically, just how much of the past rand depreciation will eventually pass through into higher consumer prices here in South Africa?

"These are big unknowns and leave the SARB and us highly data dependent in our rate calls. The inflation outlook (and hence the outlook for policy rate) depends greatly on the future path of USD/ZAR, which in turn is part of a larger global EM/DM cycle. We will publish a fuller analysis of the MPC meeting shortly."

Hungarian Forint exchange rates under pressure

Looking at the Hungarian Forint exchange rates we see the pound sterling to forint exchange rate (GBP/HUF) is 0.74 pct higher at 3.7783. The euro forint exchange rate is 0.82 pct higher at 3.1194 and the dollar forint is 1.2 pct higher at 2.2928.

"Contagion also hit Hungary with the short-end HGBs coming under pressure and markets bidding EUR-HUF up to the key 310 threshold, forcing the NBH’s Pleschinger to express concerns about the forint fall being "too fast and too big". As expected Hungary is coming under pressure and we look for further upside in USD-HUF and PLN-HUF," say UniCredit.

US Fed cuts aid to global markets

The outlook for the South African Rand and Hungarian Forint has turned gloomier in 2014 largely thanks to the reality of the withdrawal of monetary stimulus in the United States.

It was this cheap money that found its way into developing markets thus providing a boon for the likes of ZAR and HUF.

However, the party is now over with the US Fed announcing the additional withdrawal of 10BN USD a month in asset purchases.

The move was widely expected, the new purchase rate of $65bn per month, $30bn in agency MBS and $35bn in Treasuries, will begin in February.

The committee also left its forward rate guidance unchanged.

"We expect the committee to continue reducing the pace of asset purchases by $10bn at each upcoming FOMC meeting through September, and then take a final $15bn reduction in October to conclude QE3," say Barclays.