Hungarian National Bank to decide the forint’s fate next Tuesday: plummet may follow

The Hungarian forint has lost a lot of its value recently. The Hungarian National Bank started a base interest rate decrease program. That helps the Hungarian economy’s revival by boosting the credit market. At the same time, it results in the weakening of the Hungarian national currency. Next Tuesday may mark another step towards a weaker forint since the National Bank’s Monetary Council will decide about another base rate cut.

According to index.hu, the forint started this week at 393 against the euro and finished on Friday above 397. That was because the National Bank reported a EUR 213 million deficit, which was below expectations.

On Wednesday evening, the forint began to strengthen again thanks to the Fed’s decision about the American base rate. The dollar weakened, and emerging currencies like the forint strengthened.

The national bank’s cut can be either 50 or 75 points

The Hungarian National Bank believes that June 2024 is the first possible date when the Fed would decrease the American base rate. That may be followed by additional minus 25 points in every quarter. That can help the Hungarian economy and the forint, Márta Balog-Béki, a senior analyst of the MBH Elemzési Centrum (MBH Analysis Centre), said.

Photo: FB/MNB

On Thursday and Friday, the Hungarian forint continued to weaken due to the strengthening of the USD against the EUR.

György Matolcsy’s Hungarian National Bank will make the most important decision on Tuesday. Zoltán Varga, a senior analyst of Equilor Investments Ltd., said they expected a 75-point base rate cut. Makronóm Institute’s prognosis contains a 50-point cut.

Other factors affecting the forint’s currency exchange rate level

Moreover, the National Bank’s expectations concerning inflation and economic growth will also affect the forint’s currency exchange rate.

Experts believe the euro will remain in the 390-400, while the USD in the 360-370 domain in the following weeks.

Photo: facebook.com/bpcorrectchange

The Hungarian Central Statistics Office (KSH) will share the unemployment rate and the balance of payments on Wednesday. On Thursday, they will make the average gross salary increase public. Those can also affect the forint, but the deciding factor remains the MNB’s base rate cut decision.

UPDATE

On Tuesday: the Hungarian central bank cuts the base rate again, details HERE

Read also:

• Grim outlook: Will the forint plummet to 400/EUR? – Read more HERE
• Hungary introduces brand new strange-shaped yet fabulous forint coins – Details in THIS article

Featured image: depositphotos.com