The forint strengthened to around 410.30 to the euro shortly after the central bank raised the base rate by 200 basis points on Tuesday.
The forint firmed 10 minutes after the announcement by 0.5-0.6 percent to 410.30 forints from 412.25. The dollar went from 411.82 forints to 409.40 after the announcement, while the Hungarian currency strengthened to 415.40 against the Swiss franc from 417.87. In the past week, the forint dropped to 417.03 against the euro.
At the end of June, the central bank raised its base rate by 185 basis points to 7.75 percent, while last Thursday, the bank raised the one-week deposit rate by 200 basis points in response a new record low the previous day. At Tuesday’s interest rate meeting, the central bank raised the central bank base rate by 200 basis points to 9.75 percent, which now matches the O/N deposit rate.
Hungarian rate-setters raised the central bank’s base rate by 200 basis points, to 9.75 percent, at an extraordinary meeting on Tuesday. The Council also decided on Tuesday to raise the O/N deposit rate by 200 basis points to 9.25 percent and the O/N and one-week collateralised loan rates by 200bp to 12.25 percent. The O/N deposit rate and the collateralised loan rate mark the bottom and the top, respectively, of the central bank’s “interest rate corridor”.
Hungarian farm-gate prices grew by 45.4 percent in May, easing from 45.7 percent in April, the Central Statistical Office (KSH) said on Tuesday. Crop prices were up by 48 percent as grain prices jumped by 73 percent and industrial crop prices by 63 percent. Vegetable prices were up by 13 percent, but fruit prices fell by 20 percent.
The price of livestock and animal products increased by 40 percent, with prices for live animals rising by 39 percent and animal products prices growing by 40 percent.