Hungarian forint: the situation is promising, serious strengthening is expected
The forint broke a two-month positive record on Monday and held up well on Tuesday. The euro was trading just above 400 forints yesterday, but experts see more and more chances for a strengthening.
The euro was already trading below 400 against the forint on Monday. This is not only good news from a psychological point of view, napi.hu writes. Technical analysis suggests that this is also the point of resistance that, if broken, could lead to further gains for the Hungarian currency.
After Tuesday’s opening, speculators tried in vain to weaken the Hungarian currency. They succeeded, but only for a few seconds: the euro suddenly jumped above 402 forints. And then, the forint started to strengthen again. The euro was back around 401 forints a few minutes after the opening. The dollar was also below 401, the Swiss franc was below 405 forints and the pound was around 460.
The agreement on EU funds could fuel the rocket under the forint and further strengthen the Hungarian currency.
“The EUR/HUF has started a downward trend, which is very positive news for the Hungarian currency. Yesterday, the exchange rate was able to dip below 400 forints, and the weakening of the dollar may have given the forint a further boost,” KBC Equitas said. “The decision on EU funding is the one that investors should really look forward to, with more positive news coming out recently that positions are converging,” they added.
“The euro-forint exchange rate has tested firm supports. It dipped below 400 in Monday’s trading session and then started a correction from there, but the technical picture remains down. The 399.60-400.00 range can be marked as support, while short-term resistance has formed at 405,” napi.hu quoted Equilor as saying.
High inflation, words PM’s chief of staff weakened the forint
Now that the new data on October inflation is out, the forint reacted to the news as well. Inflation in Hungary in October was slightly higher than expected, to which the forint reacted with a moderate weakening. The forint continued to weaken after Gergely Gulyás, the PM’s chief of staff announced the extension of price freezes, with the euro now at 404.8, 0.6% higher than yesterday. At the same time, the EU agreement may be close: there will be concrete news in late November or early December. This could finally pull the forint out of the ditch.
Read alsoThe forint is the strongest it has been for a while – positive prospects?
Source: napi.hu, Portfolio