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Central bank’s decision sent the Hungarian forint soaring
Tuesday saw a brisk rise in the Hungarian forint. The central bank’s communication played a big role in this. It seems that exchange rate stability has become an important priority, which also plays a prominent role in curbing inflation in Hungary.
The central bank’s decision was good for the Hungarian forint
On Wednesday morning, the forint fell below 380 against the euro for the first time since the banking crises interrupted the earlier strengthening trend, napi.hu reports. In addition to the general market calm, the strong message from the Hungarian central bank (MNB) most likely played a major role in this.
At Tuesday’s interest rate decision meeting, the MNB did not change its monetary conditions (we wrote about this in detail here). What is more, Vice President Barnabás Virág stressed that the 18 percent interest rate on overnight deposits is justified for the time being. Meanwhile, the 13 percent level of the base rate cannot be considered low either.
The forint’s role
The stability of the forint will play an important role in bringing down inflation. A weaker domestic currency also tends to make imports more expensive, thus increasing prices. However, the extent of this depends on the role of imports, napi.hu writes.