Central bank may intervene: a record weak forint poses a serious threat to the Hungarian economy

The National Bank of Hungary (NBH) will use all elements of its toolkit to intervene to ensure the stability of the domestic financial markets if necessary, the central bank told MTI on Tuesday.

The central bank is closely monitoring the situation and is ready to intervene at any moment, the NBH said.

Financial trends across the region are currently shaped by external circumstances, the consequences of an extraordinary military conflict, it added.

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Data of the recovery period following the coronavirus pandemic show that the fundamentals of the Hungarian economy are strong, the central bank said.

“The clear goal of the NBH is to ensure that the increased risks due to the geopolitical circumstances will not jeopardise Hungary’s price and financial stability. Money market movements are not justified by fundamentals, but they increase upside inflation risks,”

the NBH said.

Regional currencies all weakened on Tuesday, with the forint softening to a new historic low, slipping past 379 to the euro early in the afternoon, to strengthen back to 375.50 at 3pm.