Forint in uncontrolled decline, crossing multiple lows: when will it stop?

This week, the forint has weakened against the euro by over four units, primarily influenced by disappointing GDP data. The domestic currency opened the day at a level not seen since late 2022 and then dipped even lower during the morning hours. Against the British pound and the Swiss franc, the forint is at its weakest in over two years.

The forint is weakening uncontrollably

On Thursday morning, the forint opened above HUF 408 per euro, according to Portfolio. While the situation on the foreign exchange market does not indicate panic, the forint is experiencing a gradual decline. Investors betting on the currency’s depreciation are increasingly active, sensing no significant factors to support a strengthening of the Hungarian currency.

Today is expected to be quieter in the foreign exchange market compared to yesterday, which saw significant movements due to global GDP data. However, the Hungarian figures were disappointing.

Should panic develop, it could lead to dramatic sell-offs, Index reports. Dániel Molnár, chief analyst at the Makronóm Institute, noted that if panic arises, it could trigger a wave of selling and rapid depreciation. While the currency’s weakening trend did not start this week, Wednesday’s GDP data highlighted the potential for intervention from the Hungarian National Bank (NBH).

Despite efforts by National Economy Minister Márton Nagy to manage market expectations regarding the poor GDP figures, the forint took a hit as economic performance declined by 0.7% compared to the previous quarter and the same period last year.