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Hungarian forint: recent changes and their causes
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This Monday, the Hungarian Forint (HUF) was pushing higher versus the US Dollar (USD) and was over o.7% stronger against it. However, that was more about the weakness of the USD rather than a fundamental gain of strength of the Hungarian currency. At 08:30 this day, the USD/HUF was trading at 294.83, which was well away from the currency’s record low of 314.00 recorded just three weeks before that.
What’s happening to the US Dollar?
Judging from what can already be seen on live Forex trading platforms over the last few weeks, the US Dollar is being massively damaged across the board. It has shown its worst weekly loss in the last four years as the majority of investors rushed towards US bonds, driving bond yields lower and spoiling the American currency’s appeal for others.
However, investors decided to completely ignore the published reports about impressive non-farm payroll.
According to the Labour Department, there were 275,000 jobs created in February, which by far exceeded the promised 175,000 forecasts. Moreover, the unemployment rate has decreased from 3.6% to 3.5%. This report can show that the US economy is still going strong regardless of global concern.
But it is also important to keep in mind the outbreak of coronavirus which severely damaged economies in different countries. And as the number of cases in the United States escalated sharply from the end of February, investors are panicking over how the outbreak can further impact the US economy. Therefore, in the light of recent updates, the US stock markets are expected to open around 4.5% lower regardless of the strong risk of trading.
The connection between the Hungarian Forint and Inflation Rate
The Hungarian Forint seems to be going strong extending the gains from last week. According to data published on Friday, industrial production in Hungary rebounded in January, which ultimately showed a 2.4% increase in YoY, up from a -1.2% decline shown in December 2019. However, that was still lower than the rate promised by the analysts, 3.9%.
Moving further, it is expected that the focus of Hungarian financial analysts will now switch to inflation data which was updated this Tuesday. Notably, it was stated that if the inflation rate will show a declining trend, then this could dampen demand for the Forint as Nation Bank of Hungary is unlikely to change any of its policies.