Hungary’s forint will break the 400 HUF/EUR exchange rate level by Christmas?
The Hungarian national currency has been showing a strengthening trend recently. That is partly due to investors pricing a recessionary environment as well as to the downfall of the European and American stock markets. Will the forint break the 400 HUF/EUR exchange rate level by Christmas?
According to portfolio.hu, a Hungarian economic news website, the Hungarian forint was above that level yesterday evening but only needed a gentle push to break it. Meanwhile, we had to pay 378 HUF for one USD. As we wrote earlier, the forint has been around the 420 level last week against the euro. It was mid-November when the Hungarian national currency was at 400 HUF/EUR the last time.
Furthermore, the forint has not been this strong against the USD since early July.
Index.hu argues that the strengthening is due to the Brussels agreement. On Thursday, the European Commission said they accepted the provisions of the partnership agreement regarding the EU’s 2021-2027 development plan. However, there are still quite a few milestones that need to be accomplished before Hungary receives the 22 billion euros aid, Pénzcentrum cleared. However, it seems even good news from Brussels can calm the markets and attract investors. As a result, forint can continue to strengthen before Christmas.
As we reported earlier, Hungary badly needs the euro to maintain its economy. That is because the country has to import a massive amount of energy and pay for it in foreign national currencies, for instance, in euros. As a direct result of the forint’s plunge, energy supplies have become extremely costly recently. Previously, the Orbán administration created a Hungarian economy based on cheap energy and labour force. That is how the government attracted a huge number of foreign investments that required raw materials Hungary did not possess but imported.
If the forint gets stronger and the country receives billions of euros from Brussels, the economy may get back on track.
Read alsoShould we expect a 380 or 425 HUF/EUR exchange rate in 2023? Here are the prognoses
Source: portfolio.hu, index.hu, Pénzcentrum
1 Comment
The forint is irreally strong right now. Small investors flocked to change their forint to usd and eur last year, and large investors hyped it up, but now while small investors keep selling forint, large investors killed the hype and sold usdhuf after the usd’s weakening. And foreign investors into Hungary only see govenment controlled English-Hungarian medias (including dailynewshungary), which severely underreport how bad the situation is to prevent panic and keep the forint strong (and to avoid backlash toward the government which controls them).