Forint jumps to a peak after major decision of central bank
On Tuesday, the Hungarian central bank announced that it would cut the policy rate by a further 100 basis points, bringing it closer to the base rate. In its communication, the central bank stressed that it will continue to move cautiously on the interest rate path. Thanks to this, the forint strengthened, reaching below 380 against the euro, a one-month high.
The Monetary Council decided on Tuesday to set the key interest rate at 14% from Wednesday, Index reports. At the same time, the national bank left its base rate unchanged at 13 percent, in line with analysts’ expectations.
Even before the central bank’s decision, the forint strengthened, rising from 383 against the euro on Tuesday morning to close to 381 around noon. The forint rallied even further after the background discussion following the interest rate decision, reaching HUF 380.87 to the euro at 4 PM.
Following the central bank’s interest rate decision, the forint hit a one-month high against the common European currency.
On Wednesday morning, the Hungarian currency continued to gain momentum, reaching HUF 380.32 per euro at 10.30 and even dipping below 379 at around 12.15 PM.
Was it not the central bank’s decision that strengthened the forint?
“The forint reacted neutrally to the expected interest rate decision and to the central bank’s continued emphasis on caution,” Gergely Suppan said in an analysis sent to Index. “The forint responded to the sharp weakening of the dollar with a strong gain, breaking the 200-day moving average,” said the senior analyst at MBH Bank.
He detailed that the dollar weakened sharply against the euro and major currencies on the back of a sharp fall in job vacancies and consumer confidence, which lowered expectations of interest rate hikes. Meanwhile, the zloty stagnated and the Czech koruna strengthened slightly, Index adds.
Currency exchange at 12.25
EUR/HUF: 379.02
USD/HUF: 348.19
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