The forint fell sharply against other currencies on Thursday, 24 November. The euro rose above 415, while the dollar is close to 400. Experts say there are ominous signs in the exchange rate, which could return to a record weak 430 EUR/HUF.
On Thursday, the forint started to fall after bad news from Brussels. Those bad news were that EU funds are still uncertain and Hungary will probably have to wait until at least March for approval, napi.hu reports. The euro rose above 415 forints and the dollar jumped to around 400. This is not a good sign, experts say.
“An ominous technical formation has appeared on the euro-forint chart, an inverted head and shoulders with a 415 neckline. Today, the rate has already attempted to break the level, which would result in a target price of 430. All indicators are pointing up, with a good chance for further upside. Of course, the news on EU funds remains a major source of uncertainty, but yesterday’s information could set the stage for a bigger weakening of the forint,” Equilor said in its analysis.
The EUR/HUF has already started to see a lot of movement on Wednesday. It was after press reports that the European Commission may propose to the Council to suspend EUR 7.5 billion of aid. This would be a less favourable scenario from a Hungarian point of view than expected. Preliminary reports had suggested that a smaller amount would be withheld. Following the news, the EUR/HUF started to rise, approaching the 413 forint level within a day, KBC Equitas said this morning.
Next week, the Council will decide on the issue, but the Commission’s assessment will be the decisive one, Forbes writes. Bloomberg reports that the European Commission is unhappy with Hungary’s anti-corruption commitments. Thus, it will propose suspending EUR 7.5 billion in catch-up funding. That is more than previously leaked, according to Germany’s FAZ.
Source: napi.hu, Forbes, Bloomberg, FAZ