Hungary’s forint became one of the best currencies in the world!

After reaching several historic lows against the euro and the American dollar last year-end, it is surprising that the Hungarian forint became one of the best currencies in the world.

According to portfolio.hu, in 2023, the Hungarian forint is one of the world’s best-performing currencies. Only the Chilean and Mexican national currencies preceded it slightly. That is because the national bank’s base interest rate remained high in Hungary, which helps the forint not to plunge again.

In 2022, the forint was above the 400/EUR limit. In October, it exceeded the 430 psychological barriers, which meant a historic low for the Hungarian national currency. That is when the national bank intervened and raised the base interest rate significantly to 18 percent. Afterwards, the value of the forint started to increase. But it also means that Hungary’s financing cost more for the taxpayers.

In the last few weeks, the American bank collapses damaged the Hungarian national currency, but the 18 percent high base rate helped. That is higher than in other European countries and unique even in emerging markets. As a result, nobody speculates against the forint, which helps maintain its value. For example, the Polish and Czech base interest rate is around 7 percent. However, the big amplitudes in the forint’s value clearly show that the national currency is vulnerable to foreign economic changes.

In the last three months, the forint strengthened against the euro by 4.8 percent, while that rate was 6.3 percent in the case of the USD. As a result, in 2023, only the Chilean and Mexican national currencies strengthened more. However, there, the base interest rate stands only at 11.25 percent. In a yearly comparison, however, the forint’s state is not bright. For example, it weakened against the dollar by 5 percent.

Read also:

• Central bank’s decision sent the Hungarian forint soaring
• There are several reasons for the sudden weakening of Hungary’s forint