The forint weakened further on Monday morning. The euro-for-euro exchange rate is now above 404 forints, and technically there is nothing that can stop the fall, only a drastic move by the Hungarian National Bank can turn the tide, napi.hu said.
The forint continued to depreciate on Monday. The Hungarian currency was at 401.5 against the euro at the open, but the common EU currency was already above 404 forints before 11 a.m., with the exchange rate currently at a historic high of 404.779. The dollar rose to 382 against the euro, while the Swiss franc was also trading above 399 forints this morning.
Experts do not expect any significant forint appreciation in the near future. “The euro is not really able to break away from the 400 forint level, so the exchange rate has been near its peak again on Friday. The exchange rate is still very far from the 50-day moving average, and for the time being it continues its upward move in the established upward trend channel, of course the 400 level seems to be strong, but the euro/forint cannot break away from it in the long term. This week, the MNB’s interest rate decision, possibly a change in the benchmark rate for Thursday’s one-week deposit tender, could bring strength for the Hungarian currency,” analysts at KBC Equitis wrote this morning.
“The dollar weakened slightly against the euro on the back of positive sentiment and lower interest rate hike expectations, while the yen also weakened on improved risk appetite. The forint was unable to benefit from the weakening dollar and the good sentiment, and moved above the key 400 level against the euro. Thus, the domestic currency continues to be viewed negatively as the zloty and the Czech koruna strengthened,” added Gergely Suppán, senior analyst at Magyar Bankholding.
“We start the week with the euro above 400 forints ahead of the MNB interest rate decision. With the rate still above the key 400 forint euro level, it is feared that the central bank will fail to reassure markets on Tuesday, which could push the rate to historic levels. This is also important as there is no technical resistance at these levels, as we are near all-time highs, and in an extreme case, the fall could even accelerate due to a negative message from market participants. In addition, we have the lowest base rate in the region, after the Czech and Polish central banks have both made significant hikes in recent weeks, which is of course partly offset by the fact that the benchmark one-week tender is still higher here. A hike lower than the expected 50 basis points could push the forint into a negative spiral, despite the central bank’s earlier communication that it would proceed at a slower pace, this may be worth revisiting,” Equilor Befektetési Zrt said.
The majority of the Hungarian population is not surprised by this news, as they expect the Hungarian currency to weaken further this year, and even expect the euro to reach 450 forints by the end of the year.