Here is why experts say Hungarian forint will never be strong again

Last week, we had to give 400 HUF for 1 EUR. On Monday morning, we had to pay 383 Hungarian forints for 1 Euro, but the Hungarian currency strengthened during the day. In the afternoon, we could buy 1 euro for “only” 371 HUF. Today this rate is 1:372, so it seems that the downward spiral of the Hungarian currency has stopped. However, experts are not calm. Here is why.

Government-close Magyar Nemzet is hopeful

According to Magyar Nemzet, the war caused the forint’s weakening in the last few weeks. However, those selling forint and buying foreign currencies disappeared from the market so forint has the chance to stabilize. The government-close paper argues that the forint started the year well, and experts hoped this tendency would remain in 2022. However, the increasing tension between Russia and Ukraine and the Russian invasion

forced the forint into a downward spiral.

Hungary was not alone in the region with that problem. The same happened to the Polish zloty and the Czech koruna.

Magyar Nemzet says the state of the Hungarian economy did not explain that trend. The weakening of the regional currencies was caused by investment funds that started to sell their regional financial assets, including Hungarian ones. Afterwards, they converted the received money to euro and USD. Therefore, regional currencies weakened, while the euro and USD got stronger. Forint reached its new nadir last week when 400 HUF cost 1 EUR. After that its value started to increase. The trend was the same in the case of the Czech koruna and Polish zloty.

The question is whether the forint will return to the previous 340-370 HUF/EUR zone or remain in the 370-400.

Magyar Nemzet argues that, provided nothing unexpected happens in the war, the forint value will remain around 370. Furthermore, the government-close daily say if the new measures of the national bank will be successful

the Hungarian currency might strengthen.

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Opposition economist is pessimistic

Ákos Péter Bod, co-leader of the united opposition’s economy cabinet, thinks differently. The former chairman of the Hungarian National Bank believes that the forint will remain in the 365-400 zone because the Hungarian economy is very dependent on Russia’s energy export. He added that nobody should wait for a 330 HUF/EUR currency exchange rate in the future.