The Hungarian forint may soon hit a euro record!

The forint is showing sustained strength, helped by an increasing number of factors. The forint collapsed during the US banking crises in March, but has since regained strength. It is now close to its strongest level this year. Several factors have emerged that could even allow it to reach a top.

The forint is showing sustained strength and is being helped by an increasing number of factors, napi.hu reports. Even this year’s peak may be on the way.

The Hungarian forint is being supported

The most important stabilising factor in March was the Hungarian Central Bank’s (MNB) strong stance on exchange rate stability after the interest rate decision meeting. MNB indicated that strong fluctuations in the forint exchange rate were unfavourable. They also noted that a weakening of the forint would hamper the decline in inflation, which is the main economic aim of the government for this year. So, they were doing their utmost to ensure that this did not happen.

In addition to the support from the central bank, a fundamental factor has emerged. There was a large surplus in February’s external trade in goods, thanks to the expansion in exports, napi.hu explains. In the longer term, the exchange rate is mainly influenced by the balance of payments. The external balance of goods and services is an important part of this. Another important factor is that Hungary’s main export market, Germany, has also weathered the crisis.

Read also: Expert: Hungary-USA relations at nadir, Orbán named Biden greatest adversary

Cooperation between the central bank and the government

In recent months, the forint market has been disturbed by the disagreement and tension between the Hungarian central bank and the Orbán-cabinet. Now, however, György Matolcsy, Governor of the Central Bank, and Mihály Varga, Minister of Finance, held a personal meeting. They even issued a statement on the cooperation between the government and the central bank.

Another positive point in terms of the exchange rate was a figure from the Energy Ministry showing that gas consumption fell by 25 percent in the first quarter. This is also positive for the exchange rate, because although the price of gas is now a fraction of last year’s, a quarter less gas has to be imported than a year earlier.

Read also: Time to haggle: the reasons why you can save big on a home purchase in Hungary

Annual high against the dollar is done, is the euro record coming?

The exchange rate has already reached an almost one-year high against the dollar, which we reported in detail here. However, this is also due to the weakening of the dollar against the euro. The forint exchange rate against the euro is a significant figure, as the bulk of the country’s external trade is in euros. A new annual peak against the euro would be reached at a stable level of 370. That is a change of only HUF 4 per euro compared with the exchange rate on Friday morning.

Read also:

If you would like to support the work of the Daily News Hungary staff and independent journalism,
please make a donation here

Hot news

2 Comments

Larry says:

16/04/2023 at 15:57

Forint April 15/22 376.18 per Euro, Forint April 15/23 373.65.
Hungarian central bank rate Apr 22- 4.25%, Apr 23 – 13%
Hungarian year over year inflation Apr 22 – 9.5%, Apr 23 – 25%
Are you better off now than you were a year ago?
What is going on now is a “carry trade” by foreign investors who are borrowing money in low interest countries to invest at high interest in Hungary. The Orban government however passed a decree in March (the government operates outside of the democratic parliament due to its’ “emergency” declaration it has continuously renewed for over two years) banning Hungarians and retail banks from putting cash in central bank facilities. When inflation finally comes down and the central bank cuts rates foreign traders reverse their carry trade and the forint will crash.
Larry says:

16/04/2023 at 16:39

Napi says the Feb surplus in the external trade in goods is due to an expansion of exports. That is phoney baloney. Retail sales in Hungary are down 10% year over year due to the impoverishment of the Hungarian people. A lot of retail sales is made up of imported goods. From ING Bank “After January’s very disappointing performance, the Hungarian retail sector continues to suffer amid the cost-of-living crisis, as the volume of retail sales in February declined by 10.1% year-on-year (YoY), adjusted for calendar effects. We were already pessimistic about the January and February readings, but the final data exceeded even our bleakest expectations.”
https://think.ing.com/snaps/hungarian-retail-sales-fall-off-a-cliff