Global currencies: Record lows seen in the Hungarian Forint
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In recent weeks, the national currency of Hungary reached an all-time low relative to several major currencies. Against the euro, the Hungarian currency hit 331 forints (and moving all the way to 331.87). This is the weakest price level that the Hungarian exchange rate has seen to date. Sizable losses in the forint have not been surprising, as the currency already fell to a near-record low against the euro on a few different occasions over the last few months.
The last time the exchange rate in the EUR/HUF currency pair rose above 330 was in July of 2018 (when the euro strengthened above 330.70 HUF). Hungarian economic data has supported this outlook, as the exchange rate for the U.S. dollar moved above 299 HUF and the Swiss franc hit 305 HUF in the same market activity trend.
According to many economic experts, there are a few different reasons which help to explain the record low in the forint. Investor fears related to a no-deal Brexit or the U.S.- China trade war have worked together as contributing factors. At the same time, Hungarian market assets have a negative real interest rate (one of the largest negative interest rates in the emerging markets).
Last, the major players in the world economy don’t expect monetary policy to show an increase in the near future. Inflation is holding at tolerable levels, and this is another factor that may continue to weaken the exchange rate.
Hungarian National Bank Comments
