Rapid appreciation: Hungarian forint surges to 4-month high against euro and dollar

The Hungarian forint has experienced a significant strengthening against major currencies, reaching a four-month high against the euro and making substantial gains against the US dollar. This surge in the forint’s value has caught the attention of financial markets and analysts alike.

Exchange rates

As of Wednesday morning, 12 February 2025, the forint has made impressive gains, Portfolio reports. The EUR/HUF exchange rate dropped below 402, with the euro trading as low as HUF 402.00. Simultaneously, the USD/HUF rate fell below 387, with the dollar trading around HUF 387.00. The Swiss franc was not left behind, as the CHF/HUF rate also decreased, with the franc trading at HUF 426.10.

Factors driving the Hungarian forint’s strength

Several factors have contributed to the forint’s recent appreciation. Yesterday’s inflation data showed an unexpected increase to 5.5%, catching many market participants off guard. Additionally, the annualised quarterly growth in core inflation exceeded 9%, indicating broad-based price increases.

In response to these developments, the market has now priced out one of the two expected interest rate cuts for this year, reflecting a belief in continued tight monetary policy by the Hungarian National Bank (MNB). Furthermore, the US dollar has weakened against major currencies, including the euro, which has indirectly benefited the forint.

Market implications

The forint’s strengthening has several implications for the Hungarian economy and financial markets. A stronger forint could lead to lower import costs and potentially help curb inflation in the long run. However, a significantly stronger currency might impact the competitiveness of Hungarian exports. The forint’s performance may also reflect increased confidence in the Hungarian economy and monetary policy.

Looking ahead

Market analysts suggest that the Hungarian forint’s movement will continue to align with global economic trends. According to Portfolio, key factors to watch include today’s upcoming US inflation data, which could provide insights into global inflationary pressures. The Hungarian National Bank’s future decisions on interest rates and monetary policy will be crucial in determining the Hungarian forint’s trajectory. Additionally, overall market mood and risk appetite will play a role in the forint’s performance against major currencies.

Earlier this year:

• Hungarian forint continues its freefall, faces two-year low against USD
• Grim predictions for Hungarian economy in 2025: inflation and EUR/HUF 420 exchange rate

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