Forint weakens uncontrollably, reaches 6-month low: 400 EUR/HUF on horizon

In recent days, we have seen a sharp weakening in the forint exchange rate. The 400 psychological level against the euro is slowly being reached again.

According to Portfolio, it is worth paying particular attention to the dollar now. The US currency is hovering around the 1.05 level against the euro. If it can break through it on a sustained basis, it could bring further weakening of the forint.

6-month low for the forint

Shortly before noon today (28 September), the euro was worth 394.53 forints. The last time the forint was weaker than this was at the end of March, hvg.hu reports. The exchange rate is now around 393.6, which is still 0.25% weaker than yesterday.

The forint is also helped today by the dollar correcting after reaching the psychological level of 1.05. It has not been able to sustain this level for the time being. The euro-dollar now stands at around 1.0533, 0.3% higher than Wednesday evening, Portfolio writes.

What triggered this?

As hvg.hu explains, there have been several events in recent days that may have worried investors. At the Economist’s rally (Közgazdász vándorgyűlés), first Finance Minister Mihály Varga spoke about the possibility of austerity measures, and then Minister for Economic Development Márton Nagy said that the government is in crisis management mode.

The coordination between the central bank and the government has now completely broken down. The national bank first in its interest rate decision on Tuesday and then in its Inflation Report on Thursday estimated that inflation could be higher than expected and that Hungary could be in a year-long recession.

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