Hungarian forint collapsed: is 400 EUR/HUF close again?

The impact of the weekend’s US bank panic seems to be easing. European stock markets are already in positive territory and currency markets have calmed down. However, despite all this, the forint is still falling today, after yesterday’s huge weakening. It is the only currency to do so. Currently, one euro costs 393 forints.

The forint is still not doing well

Monday was all about the impact of the collapse of the US bank SVB around the world. Bank shares and stock prices fell, bond yields fell, the dollar weakened, oil became cheaper. On top of that, as a bad news for Hungary, the forint collapsed. The forint seems to be one of the most vulnerable currencies in the world. It certainly is in Europe, napi.hu writes.

Meanwhile, the Czech koruna, the Polish zloty and the Romanian leu weakened only a little. Why is the forint alone still weakening on Tuesday?

Read also: Politico: Viktor Orbán likes to talk big

What are the reasons?

Recently, the fate of EU funds to be paid to Hungary has again become uncertain. In addition to the previous conflicts, a new one has been added to the list: the months-long delay in the Hungarian parliament’s ratification of the Finnish and Swedish NATO membership.

These uncertainties were compounded last week by a particularly bad message: open disagreement and even criticism between the central bank and the government. Thus, the forint was not helped by any softening statements (namely, the ones stating that the central bank and the government is cooperating).

Taken together, these were reason enough for investors to be among the first to get rid of the forint and forint-denominated assets.

Read also: Another European country turns against Hungary

What is to come?

The key question then is whether the emerging trend will survive this shock or whether it will break. The current exchange rate level is in a very important zone. If the domestic currency can hold on and start to strengthen again, the positive trend could be rescued. However, if it reaches the 400 level against the euro, this positive trend will be over, napi.hu concludes.