Reason why the Hungarian forint keeps weakening
The Hungarian forint has been getting weaker lately. Even when it strengthens, it is still not as strong as it could and should be. Read our article to find out why the Hungarian currency is where it is today.
Forint being this weak is unreasonable
“There is no reason for the euro to be 400 forints,” says former central bank governor György Surányi, who says that the forint is weakening at almost every word of György Matolcsy (Governor of the Hungarian National Bank, MNB) and Márton Nagy (Economic Minister). According to Surányi, this shows that in the eyes of the market neither the government nor the central bank has any credibility, writes Forbes.hu.
Former central bank president György Surányi shared his thoughts on the weakening of the forint in an interview with Privátbankár.hu on 23 June. Surányi was twice head of the Magyar Nemzeti Bank: in 1990-91, he was State Secretary, and between 1995 and 2001, he was its President.
The weakest in the region
It is a sad fact that the forint-euro exchange rate has been hovering around the 400 level for days. The forint has not performed well over the past ten years, with a decline of around 50%, it is one of the worst performers in the region. Since February alone, it has weakened by 12-13%, far underperforming the currencies of the region, Forbes.hu reports.
Why does the forint keep weakening?
According to the Central Statistical Office (KSH), domestic inflation is 10.7%. About half of inflation is the result of externalities, according to Surányi. But the other half is due to internal effects.
“The head of the MNB has said that neither credit outflows nor loose fiscal policy nor real wage increases have an inflationary impact. So what on earth could have an inflationary effect?” asks Surányi.
“Whenever either the minister or the central bank president has spoken, the forint has always reacted by falling. They should think about their own credibility,”
he adds.
As for the Minister of Economic Development, Márton Nagy, who said that the forint exchange rate is exactly where it should be, he said, “I do not think it is a lucky way of putting it, the exchange rate fell five forints after that. In a small, open economy, neither the government nor the central bank can say that they do not care about the exchange rate.”
Read alsoNo stopping, here is the new low: 404 forints for the euro
Source: Forbes.hu, napi.hu
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5 Comments
Owned a property in Hungary for 14 years, have purchased many millions of forint over that time. The best exchange rate we received was 287.63 to the £1.00 in October 2009. We purchased £100,000 for 28,763,000. We are now stuck with a property we have turned down a offer for, plus millions in the bank. We can not exchange for any other currency as the forint is now so worthless. The government Say Hungary is doing so well. I think the country is doing so badly every other country are investing in Hungary to take advantage of there worthless currency. Example, they can buy there goods for going towards half the price they used to be, but Hungarians are paying nearly double to import them. That is not the signs of a successful country with a strong economy. It only encourages Hungarians to leave Hungary to better there lives, & return to Hungary in there later years much wealthier, rather than remain in there homeland to there cost.
Are Hungarians aware of the Tumultuous time they are living in ?
The decimation of the forint – “tumbling” downward Economy – the “Silence” in the Hungarian population Unnerves me.
Hungary – is paying and its citizens will continue to be Victims, that will worsen, impact on – substantially reduce there quality of life.
Hungarians are paying the HEAFTY price – out of there pockets – inflation “soars” – in Hungary – for the “path” there current Government, under there Prime Minister – Victor Orban – has set Hungary on.
This we already are witnessing – will continue grow to result in being – Demoralizing – Disheartening, to the citizens of Hungary.
Hungarians – do behave they are “scared” of Democracy.
Democracy – is Dialogue.
What has been allowed to HAPPEN in Hungary, is that it’s present Government – the POWER it Wields – over the citizens of Hungary – moves on conducting growing in there role as DICTATING to the Hungarian population.
Democracy is Dialogue – and there is no room for they style of Dictatorship in Democracy.
I agree the the forint weakening is an issue.
But if you bought a property more than 5 years ago, even with the forint weakening you should still make a profit.
The prices of properties have doubled in the last 5 years so I don’t see how you could not make a profit on it.
Buyers – confidence is evaporating.
Property is an Investment – in most cases a Life time Investment.
Property market in Hungary – is Saturated with Sellers.
The acceleration, of this Fact, is the “broadsheet” picture, that indicates, the Economy of Hungary – besides the “collapsing” forint – is in Free Fall – Downwards.
Nervious times – that the BIG picture for Hungary – continues to paint a long period of time – that will be a MASSIVE challenge – to us Civilians.
Relax, the goverment just took a big loan in foreign currency so they can pay off many forint bonds. Just like thye did few weeks ago. Hungary has a economic structure rigth now where the week forint has more benefits. For example, foreign investors can easily rise salaries(in comparison to other countries where the currency is stable and inflation is high), for tourist they can buy cheaply more things etc. The population does not have morgages in foreign currency, so they are not affected as they where back in 2009.
For anttwel john, i recommend selling your property and buy forint bonds until you think it’s worth buying back pounds. Also, i don’t really understand wht’s your problem. In Hungary real estate prices jumpt almost double in the last decade.