The Hungarian forint has reached a new low
The Hungarian forint experienced a further decline on Tuesday morning, marking a new low for the currency in 2024.
Zoltán Varga, a senior analyst at Equilor Befektetési Plc, expressed his belief that the depreciation of the forint exchange rate is not yet over.
During Tuesday morning trading, the forint weakened once again, reaching a rate of 385 against the euro. This is the lowest level recorded since December 2023, indicating that the Hungarian currency has hit its lowest point this year. Additionally, Varga noted that the Polish zloty is also experiencing a similar decline in value alongside the forint.
“In addition, yesterday’s suggestion by the Ministry of National Economy that the benchmark for lending rates should be switched from BUBOR to DKJ yields could also contribute to the weakening of the forint. We have already received a warning from Standard & Poor’s, stating that this move could undermine investor confidence,” said Zoltán Varga.
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The Equilor analyst added that we have not reached the bottom yet. According to the expert, the interest rate decision meeting of the European Central Bank on Thursday afternoon will be a key event to watch for this week. Even though interest rates are not expected to change, investors are eagerly awaiting any messages from Christine Lagarde, Varga explained. He also mentioned the contradictory statements made by central bankers in recent weeks regarding the optimal timing for initiating a rate-cutting cycle. Therefore, it is crucial to understand the views of the central bank governor and the official position on this matter, index.hu writes.
“If the price were to cross the 385 level later on, the 387-390 range could be realistic, but negative corrections could occur in the meantime,” the expert said. He added that such a rate hike is not expected to influence the MNB’s decision, as it mainly takes inflation into account.
The analyst also mentioned the upcoming release of the US fourth quarter preliminary GDP data on Thursday and the December domestic unemployment rate on Friday morning, which could further influence the exchange rate this week
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