Hungarian forint breaks currency exchange level, additional weakening on the horizon
We have reported earlies that this week was not the heyday of the Hungarian forint. It happened before that the exchange rate increased above 400/EUR, but did not remain there permanently. Now, it seems the forint broke an important currency exchange level, and experts believe it can reach 410/EUR soon.
Hungarian forint broke exchange rate level
According to Index, external reasons like the price rise of gas resulted in a 10% weakening in the currency exchange rate of the Hungarian forint. Our currency was weaker against the euro in December 2022 and against the dollar in October 2023. On Saturday, Israel carried out attacks against Iran, which will probably make the situation worse. Currently, the exchange rate stands above 404/EUR.
Dániel Molnár, a senior analyst at Makronóm Institute, said the international atmosphere was the key reason behind the fall. The US dollar strengthened against the euro, which resulted in the weakening of the forint and the Czech koruna. Furthermore, the Hungarian National Bank did not increase the base interest rate on Tuesday. The MNB is in a reduction program but postponed base interest rate decrease for months, so the MNB did what it could to halt the negative trend.
The increasing probability of Trump’s success was also bad news for the forint since the American dollar is expected to strengthen due to the higher tariffs Trump promises. We covered the disadvantageous consequences of Trump’s victory on the Hungarian economy in THIS article yesterday.
More disturbing news may emerge
According to Index, the forint changed its currency exchange level and is expected to remain in the 400-410/EUR range. Meanwhile, the US dollar will be in the 365-375 domain, Zoltán Varga, an analyst of Equilor Befektetési Ltd, said. Mr Varga added that the higher jobless rate the KSH shared on Friday was also disadvantageous for the forint.
Next week, multiple Hungarian and international economic data will emerge affecting the forint. For example, the Q3 Hungarian GDP growth data, the GDP increase of Germany, the USA and the Eurozone, the number of American employees employed in the private sector, the German inflation, the Japanese base interest rate, the Eurozone inflation data, etc.
S+P Global Ratings affirmed its ‘BBB-/A-3’ long- and short-term foreign and local currency sovereign credit ratings on Hungary in a scheduled review on Friday. The outlook is stable. In a statement released late Friday, the National Economy Ministry attributed the high degree of confidence in Hungary in the reports of all three big credit rating agencies to the stability and resilience of the economy. However, that news did not help the Hungarian forint. On Friday, when the news emerged, the exchange rate was below 404, now it is above.
New tendency: Hungarians keep their savings in euro
According to economx.hu, it is understandable why many Hungarians decide to keep their money in euros instead of forints. Apart from the psychological effect of seeing the 400/EUR exchange rate, the Orbán cabinet plans significant money transfers for the voters before the 2026 general elections. Furthermore, most EU funds are still unavailable for Hungary, and it does not seem the Hungarian government will agree with the European Commission and settle the controversial issues soon.
Read also:
- Minister talks about the Hungarian economy’s future: 3-4% GDP growth, SME program, strict rules for Airbnb, rentals – read more HERE
- Orbán cabinet introduces stricter rules on guest worker employment
Featured image: depositphotos.com
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