Hungarian forint continues to weaken – will it fall victim to the war and crisis?
The Hungarian forint has been up and down in the past weeks, but mostly down. One company has already been wrecked by the economic crisis.
As Forbes put it, the forint is tired. After the victory of FIDESZ, it has been jumping up and down, but by now, it is stuck in the same place. The forint strengthened slightly against the euro on Friday morning. Although it has already worked its way down from Thursday’s 380, it seems that the exchange rate has settled around 378.55. It is still not a good rate at all, given that prior to the parliamentary election, the price of one euro was HUF 366-367.
Rule-of-law mechanism and press conference
There are two main reasons for the continuous bounce of the forint this week: the launch of the rule-of-law conditionality mechanism and Orbán’s press conference. As we wrote earlier this week, Ursula von der Leyen, President of the European Commission, has formally announced that the
European Commission is activating the rule-of-law conditionality mechanism against Hungary.
During a press conference earlier this week, PM Orbán said that when talking to Russian president Putin on the phone, he asked for a ceasefire between Russia and Ukraine. What is more, he also said during the conference that if Russia wants Hungary to pay for natural gas in roubles, that would be no problem for the country.
However, Ursula von der Leyen was not so happy about it. She said that it indeed would be a problem and that if Hungary does proceed to pay Russia in roubles, that would be a breach of EU sanctions against Russia.
First victim of the economic crisis: Tungsram
From Monday, Tungsram will send the affected employees on leave due to partial factory shutdowns. The reason is that the company is facing an unsolvable situation due to the economic circumstances, as mfor.hu reported.
In a recent interview with Index.hu, the head of Tungsram explained that the pandemic, global supply difficulties, and the war in Ukraine have left the group facing
an unsolvable situation, and only immediate government support would allow the survival of the historic Hungarian brand.
Therefore, there will be a shutdown from Monday for a week, and at the LED section of the factory in Nagykanizsa, it will last until 22 April, and the workers concerned will be given leave for this period, writes the Zala County news portal.
According to Index.hu, Jörg Bauer, the company’s CEO, said that the crisis does not only affect Tungsram. He said that
the European industry, including the Hungarian industry, urgently needs EU and government help to survive.
At the European level, one of his proposed solutions would be to introduce programmes to curb energy consumption, which would also reduce the EU’s dependence on imported gas and oil. Another would be to promote more recycling, which would reduce dependence on the Chinese market.
Read alsoCould this be Putin’s plan? Does Hungary side with Russia?
Source: Index, mfor.hu, Forbes, zaol.hu