Forint hits 400 historic lows against the euro, government blames Brussels
With the Russian-Ukrainian war continuing unabated, investors have been extremely sensitive to the weekend’s developments, and the risk-averse mode is taking its toll on the forint.
The domestic currency is showing a sharp depreciation, hitting new historic lows and crossing the 400 mark. International sentiment then improved in the afternoon, with the euro coming all the way back below 395.
4:20 PM
The forint has been holding steady since reaching a low of 400, and is currently trading a little below 395. Compared to Friday, it still represents a significant weakening of over 2%.
Against the dollar, it has weakened even more, by 2.3% to 362.5.
Forint victim of Brussels sanctions
Finance minister
Hungary’s currency has become a victim of Brussels’s sanctions, which have caused substantial damage to the Hungarian economy, Finance Minister Mihály Varga said on Monday.
Mulling a decision to extend sanctions to the energy sector poses the gravest danger to the forint and to the Hungarian people, the minister said in a video posted on Facebook.
Those who advocate extending the sanctions want Hungarians to pay the price of war, he said.
“The Hungarian government will not support a move like this at any international forum,”
the minister said.
Those who call for the extension of sanctions want to make the Hungarian people pay the price of the war
Referring to the exchange rate of the forint, the foreign minister said that
the sanctions measures have created extreme uncertainties in the European economy, adding that one of the biggest threats to the Hungarian economy now would be the new sanctions affecting the energy sector.
The ministers did not say that if Hungary were a member of the eurozone it would not face such difficulties
The forint has not fallen this much since 2008
This morning, the złoty and koruna are relatively stable, while the forint has seen a huge depreciation of more than 10 forints. The only previous example of this was during the financial crisis, when the euro was 18.09 forints more overnight (on 15 October 2008),” Erste’s team of analysts said in a morning commentary.
According to them, the war in our neighbourhood
the markets are extremely nervous and risk averson is extreme.
As the MNB sees interest rate hikes as the strongest weapon against the weakening currency, further tightening measures could come this week.
- read also: Central bank may intervene: a record weak forint poses a serious threat to the Hungarian economy
Source: MTI, portfolio, index
Not Soros’ fault, this time? Very disappointing! He must be involved, somehow. Or the Western Elite / Liberal Left … Missing them, too …
Ha ha ha. So true! The Hungarian victim complex at its finest – always someone else’s fault and always trying to deflect blame. They seem to be forgetting that the euro is not faring very well against the dollar at the moment and that will affect far more people – especially since oil and gas is paid for in dollars.
MyHungarian friends here in Budapest laughed when I bought a few million forints worth of gold in September as a hedge against inflation and the slow weakening of the forint.. They are not laughing now.