On Monday morning, we were still paying HUF 418 for a euro. But then, the Hungarian currency accelerated on the news of the Brussels agreement. By Friday evening, the EUR/HUF was already at 405. It even hit a four-month high against the dollar after the US currency faltered on news of inflation figures.
The forint did very well this week
The agreement between Hungary and Brussels was reached on Monday evening. The decision was good for the forint, which strengthened significantly after the announcement. By 8:30 AM on Tuesday, the euro was trading at 410 forints.
That was a significant improvement for the Hungarian currency, which had started trading at 418 a day earlier. The forint strengthened further on Wednesday, but after some fluctuations on Thursday, the upward momentum slowed down and the forint closed close to 405 against the euro on Friday.
After the Brussels agreement, the Hungarian currency started to soar, Index writes. The big decision came on Monday night, when the Czech government, which holds the rotating presidency of the European Union, announced that they had found a solution to the issues blocked by Hungary in exchange for approving the agreements that apply to us.
As the forint strengthened, the dollar weakened sharply on Tuesday. This pushed the forint to a four-month high against the US currency. At 2.25 PM on Tuesday, the exchange rate was still at 388.02. However, by 3.20 PM, it had fallen to 382.95. That is more than a five-unit strengthening in an hour. On Wednesday morning, the dollar did not recover either: the USD/HUF was at 382.5 forints at 11.15 AM. The last time the dollar was at such a low level against the forint was on 14 August.
The weakening of the dollar is being driven by recent inflation data on the US economy. It emerged that inflation rose less than expected last month, leading experts to expect the US Federal Reserve (Fed) to slow its rate of interest rate hikes, which explains the weakening of the dollar. The USD/HUF even briefly dipped below 380 on Thursday, before closing at 383 on Friday.