The Hungarian forint has been weakening for days and reached a new historic low against the EU’s common currency today. At a certain point today, one euro cost almost HUF 426. It seems that despite the Hungarian Central Bank’s base point increase last week, the currency exchange rate of the forint cannot be stabilised. Read more in our article below.
Historic low again – buy euro
According to hvg.hu, Hungary’s forint narrowly escaped falling under 426 against the euro this afternoon. At 1 PM, the exchange rate was 425.815, which means a new historic low after Monday’s fall. Since then, forint strengthened to 423.
Wednesday was again not the heyday of the Hungarian currency. It weakened against the dollar and the Swiss franc, as well. In the case of the former, the exchange rate was a bit below 430, while in the case of the latter, it stopped above 436 at 1 PM. However, the day is not over yet and analysts expect further weakening.
The reasons behind the weak forint
Hungary’s forint did not start the day well. Its value fell 1 percent against the EUR already in the morning. The reason behind the negative trend is the expensive energy import and the unbalanced Hungarian state budget. It seems the agreement between Hungary’s biggest electricity supplier, the MVM, and Russia’s Gazprom about a deferred payment of the gas bill did not help. HVG says Hungary would have to balance those bills with interests later.
Read also440HUF/EUR by year-end? And what should we expect in 2023?
The other reason is the EU funding Hungary badly needs but the European Commission does not want to transfer due to corruption issues. The European Parliament started a rule of law procedure against Hungary, while the European Commission had an infringement procedure this spring. The Hungarian government expressed it was committed to changing the EU funding distribution system, and some bills had already been submitted to the parliament in that regard. Furthermore, investors did not like that the Hungarian Central Bank announced last week the end of basic rate increases for this year.
The weakening forint is terrible for the Hungarians receiving their salaries in Hungary’s national currency. However, it is good for foreign investors who plan, for example, to buy property in Hungary. For them, the last few months meant a real estate price decrease in Hungary. Probably that is why Dutch, English and German nationals would like to buy houses and apartments in Hungary, mostly in Budapest and around Lake Balaton.
Read alsoHungary’s premium real estate market drastically transforming
Source: hvg.hu, DNH
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