Forint will get wings after minister’s optimistic announcement?
Hungary’s finance minister, Mihály Varga, acknowledged to Reuters in an interview that the high one-day deposit rate of the National Bank of Hungary served the protection of the forint. He added that the notion of weak currency boosting exports was in the past. The government seems committed to protecting the Hungarian national currency and not letting it weaken below the current level (370-380 per euro). But will that be enough?
The Hungarian forint is a very volatile national currency. That could be seen in its high amplitude exchange rate modifications following e.g. this year’s bank crisis. However, the Hungarian government seems to be committed to protecting its rate around 370-380 HUF/EUR. After reaching historic lows last October, the national bank introduced high one-day deposit rates. They started to decrease that, but Reuters highlighted that the process would be gradual.
As a result, the national bank (NBH) has very high losses, which the law says the state budget should cover. But it will not, probably because it does not have money for that. The sum is HUF 2,300 billion (EUR 6 billion). Mr Varga told Reuters that “we have agreed with the National Bank of Hungary that we propose a solution to the ECB that … would allow the NBH to correct its losses over the medium term, that means about 3-5 years. Having a negative equity poses no threat to the operation of the central bank.” Therefore, they will amend the central bank law.
Varga painted a very favourable picture of the Hungarian economy. He said inflation would be around 7-8 percent by December (now it is approximately 20 percent, the EU’s highest). Varga said the government planned economic growth (1.5 percent in 2023 and 4 percent in 2024). Finally, he highlighted that the suspended EU recovery and cohesion funds would start flowing. “I trust that we will not have to prepare an Fx bond issue, so talks on EU funds will accelerate,” he said.
Anda Present inaugurates HUF 2.5 billion investment
Promotional gifts company Anda Present inaugurated a HUF 2.5 billion (EUR 6.7m) expansion at its base in Kalocsa, in southern Hungary, on Thursday. The investment created 100 jobs, Finance Minister Mihály Varga said at the event. Anda Present has built a 5,300sqm hall with 1,100sqm of production area, 3,700sqm of warehouse space for finished products and a 500sqm office, CEO Attila Andras said. The project, supported by a government grant, is the first part of a 4 billion forint investment, of which the next phase has already started: the construction of a 5,000sqm warehouse, he added. Budapest-based Anda Present employs a total of 570 people, including 265 in Kalocsa.
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https://www.reuters.com/markets/europe/eus-highest-inflation-slow-7-8-by-dec-hungary-finance-minister-2023-07-20/
Link to the article. Also, “After recording big gains from quantitative easing for years, several central banks have recently reported losses as interest rates rose, including the NBH which had to launch an emergency 18% one-day deposit in October — the highest in the EU — to shore up the falling forint. The bank has since reduced the rate to 16% but it says easing will be gradual.”
Guess what propped up our HUF? One day deposits have now dropped to “only” 16 percent.
Take a look at this data and tell me all is OK in the comments below (perhaps I am misreading):
https://ec.europa.eu/eurostat/databrowser/view/IRT_ST_M/default/table?lang=en
Finance Minister Varga, a “Founding Father “- of the “besieged” Fidesz Party, his interview with Reuters was absolutely VOID of FACT.
It will be and RIGHTFULLY “pulled apart” by Global country’s of DEMOCRACY.
The propaganda from Varga’s mouth, the misleading and “veiling” of Fact, just an INSULT an abomination on Hungarian Society.
Varga’s position in the Orban Government, the decisions Economically & Financially – he has made relating to the Future direction of the Hungarian economy, post February 2020, the arrival of the Corona Virus in Hungary, decisions and policies Varga has made, the “ceiling caps” or capping Varga & Orban signed jointly off – the fiasco, that was HORRENDOUSLY been deeply harmful to Hungary, in escalating – the un-controllable Inflation times, this Finance Minister, his CV grows in being a cataclysmic embarrassment, to the citizens of Hungary.
Varga must be SANCTIONED stopped – the process he has throughout his Political life adapted of speaking of No fact, nor substance of TRUTH – a misleader of the REAL picture & Happenings, in Hungary.
Finance Minister -Varga is in the “inner sanctum” of Fidesz members – the Orban Government – that is catapulting us – Hungary – into a deepening FINANCIAL mess, that he, bears muchly on his shoulders and is accountable for.
The Reuters interview given by this current Finance Minister – Varga – the ramifications from it should rightfully DAMAGE & Scare deeply this Minister and the Orban Government, as it is NONFACTUAL.