There are several reasons for the sudden weakening of Hungary’s forint

The Hungarian forint went for a free fall for a short time against the euro but started to climb back. It wasn’t immune to the international panic, and might need some time before it could catch its breath again.

The Hungarian forint remained permanently around the 400/EUR threshold for a long time before “normalising” during the first months of 2023 around the 370 mark. The news of the recent international bank crises once again pushed it back to the former territory, but the experts of Pénzcentrum are arguing that won’t be the case again in the long term.

The international banking panic which manifested over the bankruptcy of SVB and Credit Suisse left a huge mark over the forint.

“The fall was very sharp, I had to go back two decades to find such a rapid fall in the forint exchange rate” – said Attila Weinhardt Portfolio’s macro analyst in the Portfolio Checklist podcast.

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“Obviously, the bank panic was the leading news on Monday and even on Tuesday, and this had a major impact on the forint. It is worth noting that the markets also sold shares in a hurry, which also did not help, and this “sell at all costs” behaviour weighed heavily on exchange rates.” – said Weinhardt, who also warns of the volatile nature of the Hungarian currency.

“Compared to the currencies of the region, the fall in the forint has been outsized, but it is important to underline that the forint has been on a strong march in recent months and weeks, even recovering to 373.”