Forint may strengthen to 340/EUR

The Hungarian forint’s fourth “peak attack” can be decisive regarding the Hungarian national currency’s future. If it were successful, that would enable the forint to remain permanently in the 340/EUR zone. The strengthening would mean that the forint could overcome the difficulties caused by the COVID pandemic and the war in Ukraine. However, until then, it has to reach milestones.

According to napi.hu, the Hungarian forint reached historic lows last autumn, one after the other. In October, the EUR/HUF exchange rate even went below 430, causing public outcry and political turmoil after the fourth landslide victory of Orbán in the parliamentary elections. Thanks to the drastic base interest rate policies of the Hungarian National Bank, the exchange rate could be stabilised by January. Ever since, the forint has been in constant strengthening. And it may reach a new milestone soon.

The forint reached the 370/EUR zone weeks ago, and it moved below that three times up until now. Napi.hu argues that is not a problem since, based on the rules of technical analysis, the fourth breakthrough may cause the most decisive change. In the case of the forint, such a move could result even in a permanent 340/EUR exchange rate.

Waiting for a new forint breakthrough

The third breakthrough took place on 9 June. We reported about that and the causes HERE. However, since the strengthening spanned only to 368-370, it does not mark a real breakthrough, the economic news outlet wrote. They shared a graph about the change of the forint’s exchange rate, which shows positive signs. After each strengthening period, the fallback was shorter, displaying the Hungarian national currency’s relative strength.

The fourth breakthrough should be more significant than the last three, napi.hu wrote. That is how it could change the zone of the forint. If that is not successful, the currency will probably stick to the 370/EUR level. A weakening is not likely because of the protective measures of the national bank and the fact that Governor Matolcsy regards it a priority to defend the forint against extreme currency exchange rate modifications.

National Bank Governor György Matolcsy and Finance Minister Mihály Varga: fighting against the inflation together:

The good news is that there is an export surplus, and the current account is balanced. Furthermore, thanks to the high Hungarian base interest rate, the forint is a perfect choice for investors. Finally, inflation is decreasing in Hungary despite still being one of the highest in Europe. Meanwhile, the lack of EUR billions from the EU and the government’s unfounded and quick modifications concerning finances in Hungary does not help the forint.