Hungarian National Bank will decide the forint’s fate on Tuesday: collapse or strengthening?
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The Hungarian National Bank may decide about a base interest rate cut again this Tuesday. A cut would probably not result in an exchange rate collapse, but it would break the Hungarian currency’s strengthening. Experts believe that Tuesday may mark a considerable change in both directions.
Forint strengthened a bit last week
According to index.hu, the forint strengthened a bit this week. It started at 392/EUR and finished at 391/EUR. That is because of the positive international atmosphere, and the EUR-USD currency exchange rate, which is on a 4.5-month peak.
Because of the weaker dollar, the forint tried to break the 390/EUR level on Thursday, Dániel Molnár, a senior analyst of the Makronóm Institute, said. The dollar began to decrease because the markets started to expect three consecutive base rate reductions (September, November, and December).
Meanwhile, the euro ran out of strength because the markets believed the European Central Bank (ECB) was planning a base rate cut. As a result, the euro weakened, and the forint could strengthen.
Forint strengthening was trend-like
Zoltán Varga, a senior analyst of Equilor Befektetési Ltd, said the forint may occupy the 387-397/EUR level against the euro and the 355-365 level against the dollar.
The forint’s strengthening follows a trend, Zoltán Árokszállási, the director of the MBH Analyst Centre, highlighted. The reasons are both international and domestic. First, the euro strengthened against the dollar. The only opposite change was due to the IT glitch collapsing international air traffic for days. That worsened investor sentiment and resulted in the strengthening of the dollar.
