Hungarian forint is extremely sensitive but that is good news now

The Hungarian forint has been struggling for months, reaching consecutive historic lows against the euro and the dollar in the previous weeks. However, since last Friday, it has been strengthening significantly due to foreign and domestic reasons. One of these reasons enabled the Hungarian national currency to go below the HUF 400/EUR threshold many experts thought would be inaccessible without an agreement with the European Union and getting access to the billions of euros in EU funds.

On Monday morning, the Hungarian forint started at a HUF 405/USD level but it strengthened to HUF 399/USD by evening.

As we wrote multiple times, experts agree that the forint is very volatile and extremely sensitive to political and economic announcements. For example, novekedes.hu writes that the reason behind its recent strengthening was the good news that came last Friday from the Dutch gas stock exchange. The gas prices decreased by 4 percent, and purchasers can buy that resource for less than EUR 110 again. That is probably why the forint could reach 400.13 against the euro yesterday evening. The trend is similar in the case of CHF, as well.

Read alsoThe forint is the strongest it has been for a while – positive prospects?

Moreover, good news came from Brussels yesterday. The European Commission approved Hungary’s Common Agricultural Policy (CAP) Strategic Plan for 2023-2027, clearing the way for the transfer of some EUR 8.4 billion in funding.

That may be life-saving for the Hungarian economy struggling with the lack of foreign currencies (euro, dollar, Swiss franc). That is important because the country pays for the energy in euro and other foreign currencies, so it regularly has to change a massive amount of forints which further weakens its currency exchange rate. However, EU funds come in euros, so the government will use that money to pay for the energy. That is because the beneficiaries of the EU funds in Hungary receive their allocations in forint.

Read alsoHere is why the Hungarian forint has been strengthening recently

Source: novekedes.hu