Hungarians get rid of the forint, use foreign currencies
The amount of forint cash in the Hungarian economy significantly decreased in the last few months. That is partly because of the soaring inflation reaching its peak in January in Hungary and the increasing debit card use. Furthermore, Hungarians have as much foreign currency in 2022 as ever in the previous seven years.
Hungary’s national bank (MNB) published its preliminary statistical balance yesterday, containing interesting figures, portfolio.hu summed up. The amount of cash Hungarians obtained stagnated from March 2022. That means the financial assets of the people decreased because of inflation. However, in January, even the amount of cash started to decrease. But where is the money?
According to the national bank, not in the banks because the volume of deposits fell by 5.2 percent between February and December. The transactions’ volume increased significantly, replacing cash.
However, the national bank also experienced people’s confidence shaken in the Hungarian national currency in 2022.
In the first three quarters, Hungarians bought foreign currencies for HUF 195 billion (EUR 507 million) more than they sold. Most of that money was spent by the households. According to the MNB, players in Hungary’s economy kept HUF 760 billion (EUR 1.9 billion) in foreign currencies, mainly in euros. That is a 35 percent rise in just one year.
The reason behind that trend might be the war and the weakening of the Hungarian forint. Another cause could be the increasing number of foreign tours, but data does not support that premise.
The forint reached multiple historic lows in the last months of 2022. That is because of the European Commission – Hungarian government debate over the EU funds Hungary is entitled to but cannot receive because of corruption schemes affecting their expenditure. Furthermore, Hungary had to pay a lot for energy in 2022. According to the calculations of telex.hu, the energy costs reached even 15 percent of the country’s annual GDP, rising from 3.7 percent (2019). As a result, the forint weakened seemingly unstoppably.
The government reached a partial agreement with the European Commission by the end of 2022, helping the Hungarian currency. Furthermore, energy market prices started to decrease. Moreover, the Hungarian national bank increased the base interest rate sky-high. As a result, the forint strengthened again, and performed very well in the last few weeks. This week, for example, even a 375 EUR/HUF exchange rate seemed realistic. We will see how that affects the Hungarians’ cash flow.
Read alsoConstant strengthening is tiring: the Hungarian forint today
Source: portfolio.hu, telex.hu
1 Comment
Simple – its NOT an overall complexed question to ask, with all we know growing daily the worsening Economic and Political environment in Hungary – in “Supersonic” freefall, answer the question;
– What can POSSIBLE sustain any Stabilization or Sustainability – hold to any “True” worth or value “pitted” against major trading currencies & “other” – what can SUSTAIN the forint?
The “Weight” internal and external forces on the Hungarian economy, that is Devastating – eroding the value of Hungary’s “home” it’s national currency, the forint, that we continue to bear witness to, its inability to stabilize, re-bound – factually is IMPOSSIBLE.
The forint, its Nadir – what will be the lowest of lows – it descends – its WORTH – it’s continuous in its evaporation, it’s demise and weakening – just keep observing as its GOING lower – its on the NOSE.