Panic sets in: Hungarian forint plunged to a one-year low

The Hungarian forint took a sharp downturn following revelations that the European Parliament’s legal affairs committee is pursuing legal action against the European Commission regarding the release of over EUR 10 billion in cohesion funds to Hungary last year.

The ongoing litigation could prolong the disbursement of EU funds to Hungary, which could negatively affect the Hungarian forint exchange rate in the short term. Portfolio reports that the euro jumped above 399 in the afternoon, driving the Hungarian forint to a one-year low.

The forint last traded near the 400 level in March of the previous year.

Furthermore, the dollar has also begun to strengthen following worse-than-expected US inflation data, currently hovering around 365 forints. It appears that the foreign exchange market is still processing the news concerning the disbursement of Hungarian EU funds.

In January, the European Parliament had already censured both the European Commission and Viktor Orbán, asserting that the EUR 10.2 billion had been made available as a result of yielding to Orbán’s coercion, in exchange for the Hungarian Prime Minister refraining from vetoing Ukraine’s EU accession launch—however, the EUR 50 billion in aid to Ukraine, slated for disbursement at the time, was not granted.

Now, the case brought before the European Parliament by French conservative Geoffroy Didier was initially intended for discussion solely within the EP’s legal affairs committee to assess the prospects of legal action, but MEPs opted for a vote instead. As a result,

even the conservatives, previously opposed to the lawsuit, voted to take the European Commission to court over the EUR 10.2 billion in catch-up aid allocated to Hungary.

This development underscores that Hungarian foreign policy is teetering on the brink of complete collapse and stands isolated.

The next phase in the case involves the committee presenting the case to the President of the Parliament, who will determine whether to proceed with legal action against the EC.

If that were not enough cause for concern, the MNB’s recent statement may also unsettle investors. The central bank has cautioned that the forthcoming amendment to the central bank law could jeopardise central bank autonomy and financial stability. As we wrote earlier, Hungarian forint to continue depreciating amidst deepening conflict between the Hungarian National Bank and the government, economist warns.

• Read also: Filipino guest workers’ salaries in Hungary revealed

Fidesz MEP slams EP’s ‘legally incomprehensible’ lawsuit against EC

It is “legally incomprehensible” that the European Parliament is suing the European Commission ultimately because the body’s leftist groups disagree with the EC’s decision to unfreeze funding for Hungary, an MEP of ruling Fidesz said on Tuesday.

The EP is enveloped in “panic” as its mandate nears its end, Balázs Hidvéghi said in a video message, adding that the EP’s “Soros-affiliated majority” and “the Hungarian dollar left” were “desperately continuing to attack Hungary”.

Hidvéghi said it was “tragicomic” that the one EU institution, the EP, was turning to another, the European Court of Justice, to sue the European Commission in order to “punish” a member state that “refuses to dance to their tune”.

“There’s less than 100 days left until the EP elections,” he said, calling for change in Brussels.

“If we do not want the European Parliament to become a caricature of democracy, we must elect MEPs who work for normal European people, rather than for obsessive, extreme left-wing ideologies,” Hidvéghi said.