Hungarian forint: one of the world’s weakest currency
With all the ups and (mostly) downs recently, the Hungarian forint has become one of the weakest currencies not only in the region – in Central and Eastern Europe – but in the whole world.
Second weakest currency in the world
In a year, only the Turkish lira and the Argentine peso have fallen more. On top of that, in the last three months, apart from the Chilean currency, the forint has been the weakest in the whole world, Portfolio.hu reports.
Since the beginning of the year, the forint has weakened by almost 7.5 percent against the euro. This cannot be explained merely with the difficult global economic environment, a war in our neighbourhood and high inflation. These are problems that affect our regional competitors in the same way, Portfolio.hu writes.
At the beginning of March, the record low level of the forint could be blamed on the war, but since then something else has been the problem. In three months, the forint has weakened by 8.4 percent against the euro, while the Polish zloty has depreciated only by 1.1 percent and the Czech koruna by 1.2 percent.
Events that affect the Hungarian currency
Until early May, the forint moved broadly in line with the Polish zloty, and that was when the split began. If we take a look at the events of the last two months, we might find the reasons why the Hungarian currency has been plunging. Portfolio.hu has gathered these events:
– In April, the European Commission launched a rule of law procedure against Hungary, and no agreement has been reached on the disbursement of EU funds.
– The market was not fully satisfied with the government’s fiscal adjustment package, which is partly based on special taxes that send a negative message to the business environment.
– The deteriorating fundamentals of the Hungarian economy are becoming increasingly apparent, especially the external imbalance, with the balance of payments and external trade balances both turning strongly negative.
– The dollar has strengthened: the US currency has gained 7% against the euro in three months. And the forint follows the dollar’s movements in the opposite direction, meaning that when the US currency strengthens, the forint usually weakens.
The bad news is that these negative effects are not yet abating, and there is no sign of them improving.
Read alsoYou want to avoid the extra airline tax in Hungary? There may be a way
Source: Portfolio.hu, vg.hu
The Euro – is it coming ?
Will Hungary have no alturnative but go Euro ?
The European Union may listen to a PLEA from Hungary.
There would No Doubt – be LARGE conditions, placed on Hungary, if a PLEA was made on the European Union.
Conditions like :
(1) – Hungary – converts to Euro.
(2) – Hungary – cleans up its Judicial System – without Governmental Interference.
NOTHING gets CHEAPER in Hungary.
Before our very eyes – daily as we shop, prices continue to RISE.
Call it – the Sugar tax on items witness items – up 40% in price, this past week.
Piroska – up from 800 huf to 1350 huf per bottle.
WHY – sugar content and additional tax money – from our pockets to this present Government.
The Economy – is somewhat in a “free fall” pattern, and the forint not wanted.
Citizens leave those parachutes on, as the bottom of this “free fall” – of the Economy – what else there will be, from this “fall-out” – that will IMPACT on the daily lives of ORDINARY Hungarians – only God has that answer.
“We expect come Autumn, the rising Inflation, that we are experiencing in Hungary, at this point in time, should Peak”.
This rhetoric, with ALL the under – lying Seriousness of Financial & Economic “time bombs” – associated, in the TUMBLING – Economy of Hungary is Deplorable.
Factually – inflation in Hungary is running at 15% – and rising.
Thats factual, but what we are being told from the mouths of Government – greatly differs AGAIN from FACT.
The forint – continues to be SMASHED globally – that sees it valuation, moving down-wards, an EMBARRASSMENT to Hungary.
Knowledgable input and “robust” discussions occurring & input – that it can’t be dismissed, that interest rates will “threaten” = 10% – by years end – in Hungary.
Gloomy outlook the Economy of Hungary.
I am sure the Hungarian Forint is kept weak deliberately by the Hungarian government, which is a good thing, because a weak currency increases Hungary’s ability to export, which ensures that exporting companies can continue to trade and secure jobs, this is economics basics. This is also in line with the Hungarian Government’s priority to maintain a work-based economy. The weak Forint is also very attractive for tourists to choose Hungary as a holiday destination, which is all the more important for a country which is right beside a wartorn country (Ukraine). I wonder if the Ukrainian war doesn’t affect the Forint significantly anymore why would any EU sanction affect it? The strength of any currency depends mainly on economic performance and political stability and not on what sanctions the EU has against any country.
Gabor – respectfully, if you are basing your defence, of the state, that is Fact, relating to the Hungarian Economy, its over-all Volitility – the downward trend of the Hungarian economy, on the grounds, that it is a DELIBERATE strategy / policy – by the present Hungarian Government, to keep the forint weak, in my Economic / Law Degree – obtainment and recognition, my opinion reverse of yours – we must have received our education on a differant PLANET.
Time will TELL.
History – never Lies.
You all can blame Brussel, Soros and the Us for the misfortunate of the Hungarian forint. How can Hungary win against the evil ones?.Mr.Orban doesn’t want to deliver weapons to Ukraine , made an agreement with Putin. Doesn’t want Asian, African migrants. Constantly irritating Brussel.