Hungarian forint doing something unprecedented: further slip expected
Gergely Gulyás, Minister of the Prime Minister’s Office, said the government does not have a goal concerning the interest rates and the currency exchange rates. Gulyás added that the Hungarian National Bank had to stop the forint’s fall. Experts do not exclude a 403 EUR/HUF rate.
According to 24.hu, Gulyás told the Hungarian press today that foreign causes are behind the weakening. The government does not have a goal concerning the interest rates and currency exchange rates, he added. Gulyás said the Orbán cabinet did not change the deficit target, it remained at 4.5%. He suggested the weak forint is an issue the Hungarian National Bank should solve. Furthermore, foreign reasons are behind the fall of the Hungarian national currency. Therefore, they hope an opposite trend will start soon.
Even a 403 EUR/HUF exchange rate is imaginable
Experts talking to index.hu were not that optimistic. The forint is currently at a 1.5-year low against the euro. The main reason behind the weakening is the Iranian missile attack against Israel.
The forint weakened further on Thursday, after slipping past 400 to the euro on Wednesday. The forint traded at 401.47 to the euro around 5:30 in the evening, weakening from 400.48 late Wednesday. But at 1 PM, it reached even the 402 EUR/HUF exchange rate level. The forint softened to 364.52 from 362.70 against the dollar. It eased to 427.00 from 426.67 to the Swiss franc, the Hungarian News Agency wrote.
Zoltán Varga, a senior analyst of Equilor Investment Ltd., could not exclude the 403 EUR/HUF exchange rate in a quick analysis to index.hu.
Investors try to avoid risks
Other external bad news also affected the forint in the last few days. For example, even Christine Lagarde, the head of the European Central Bank, was concerned about the dissatisfying Eurozone growth data. Moreover, Jerome Powell, President of the Fed, sent a message boosting the American dollar, which always threatens emerging currencies.
All in all, investors try to avoid risks, which is disadvantageous for the forint.
Hungarian government weakens the forint
Meanwhile, Portfolio, a Hungarian economy-focused magazine, suggested that the Orbán government intentionally weakened the forint. That is because one of the main elements of the Hungarian economic model is competitiveness. However, Hungary’s competitiveness is falling due to the financial crisis, the ailing exports, the unnatural wage rise, the high-pressure economy and high inflation. As a result, the continuous weakening of the forint is favourable for the Hungarian government’s economic aims. For example, Gergely Gulyás talked today about an ambitious minimum wage rise until 2028. Meanwhile, the Polish zloty reached a historic peak against the Hungarian forint.
Hungary makes strides in improving business environment
Hungary is among the best performing countries in the World Bank’s Business Ready 2024 report that assesses the regulatory framework and public services directed at companies, the National Economy Ministry said on Thursday. Hungary ranked at the top of the regulatory framework pillar of the B-Ready 2024 report, among 50 countries. It was in fifth place in the public services pillar and in 14th in the operational efficiency pillar.
Read also:
- Morgan Stanley predicts euro could reach 410 forints amid worsening economic outlook – read more HERE
- Euro/forint exchange surpasses 400
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