Hungarian forint seems to be in free fall again with 400/EUR, here is why

On Wednesday and Thursday, the Hungarian forint was above 400/EUR multiple times. By the evening, it returned to a level below that limit. Markets are in tension because of the American bank collapses and the problems in the European financial sector.

Hungarian forint plummeting again

According to portfolio.hu, the Hungarian forint may remain permanently around the 400/EUR threshold in the long run. Today it started to strengthen in the morning, but that trend did not last long.

Now we must pay more than HUF 397 for one euro and more than HUF 372 for one dollar. But why did that happen?

One reason is the decision of the European Central Bank. The other is that investors are afraid of more bank collapses, similar to the American ones. In such a period, the vulnerability of the forint begins to play a key role again. For example, the questions regarding monetary policies and the uncertainties regarding EU funds.

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If the international atmosphere calmed down, the forint could catch his breath again. National currencies of emerging markets do not follow that trend. The Polish zloty strengthened while the Czech koruna stagnated. Türkiye’s lira did not change, while the Russian ruble strengthened.

Minister: Hungarian banking system ‘robust, functional’ despite failing intl environment

The Hungarian banking system is stable, and remains robust and functional amid the deteriorating international environment, Finance Minister Mihály Varga said on Friday. In a Facebook post on “Facts on the stability of the Hungarian banking system in 5 points”, Varga said Hungary’s average capital adequacy ratio outperformed Europe’s two-fold. Its profitability was 1.5 times the European average, and its non-performing portfolio was 3.4 percent, low despite the war-related crisis, he said.

Its financing is stable, and has significant reserves, Varga said. “Hungary’s banking system remains robust and functional amid the deteriorating international environment, as also shown in ratings agencies’ latest evaluations,” he said.

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Source: portfolio.hu, MTI