What happened? The Hungarian forint cannot stop weakening
The exchange rate of the Hungarian currency is steadily losing value day by day. Although, there was a bit of hope for strengthening a week ago. This is not only bad news for investors but also casts a dark shadow over the future of EU funds due in the autumn.
As we have reported HERE, forint had a huge strengthening potential last week. The Hungarian National Bank (MNB) took extraordinary measures to support the stability of the forint. For a while, these actions seemed to work and the Hungarian currency strengthened from 430/EUR to 370/EUR. As the forint was constantly getting stronger, there were high hopes for it to reach the 340/EUR zone soon. However, the forint has been showing a weakening tendency in the last couple of days. On Monday, it fell back to the 375/EUR zone.
Weak exchange rate
Portfolio reported that the Hungarian forint has had a weak exchange rate for days. After a weak exchange rate on Monday evening, the forint still does not show a big strengthening. On Tuesday, the exchange rate was 374.5/EUR. This showed a minimal strengthening of 0.2 percent. On Monday, the exchange rate even passed the 375/EUR level. The weakening has been going on for days. The forint rates went from 370/EUR to over 375/EUR in just a couple of days. It appears that there is no particular reason behind this quick fluctuation. It is likely though that the positive performance of the USD might have affected the forint rates as well. Currently, the forint’s exchange rate is 343.25/USD and 436.2/GBP. As Portfolio writes, the market is now in a wait-and-see mode. There is a prospect of recovery once the new inflation data and S&P’s credit rating review are published on Friday. However, we should get our hopes up.
Other currencies
The two regional competitors of the forint, the Polish zloty and the Czech crown, have shown a minimal strengthening of 0.1 percent on Tuesday morning. However, the Turkish lira is getting weaker again. It has shown a weakening of 0.2 percent on Tuesday morning. The currency has been on a downhill tendency for weeks now. The Russian ruble has strengthened by 0.3 percent. As mentioned earlier, the weakening of the USD has come to a halt. The exchange rate against the euro did not reach the key level of 1.10. Currently, it is around 1.09, which matches the rates of Monday evening. Meanwhile, he Japanese yen firmed by 0.2 percent, while the British pound by 0.1 percent against the USD.
please make a donation here
Hot news
Hungary’s universities break through in 2024 Shanghai Rankings—Which ones are top 200?
Slovak PM Fico may sacrifice his good relations with PM Orbán to keep his governing coalition
Orbán cabinet: Hungary can receive 6.61 billion euros from the EU in 2025
Experience the magic of Zagreb’s Christmas market with a special train from Hungary!
PHOTOS: Amazing Roman Catholic parish house inaugurated in Transylvania
PM Orbán: Patriots in majority in the Western world with Trump, left unable to govern
4 Comments
WHAT – what is there to hold the Forint, that gives encouragement, that its a currency of value – or has a FUTURE ?
Hungary is DEEPENING into a cataclysmic state of a Recession, which is just one of the Economic & Financial destructive positions Factually – the Hungarian Economy is PLACED.
It will WORSEN.
Ask that question fellow Hungarians and “others” – but pay CLOSE attention, to the Currency Market’s International and European Dealers, who continue to INDICATE – the Hungarian Forint, is in a “free fall” and has NO ability to find a STABLIZED base or worthlessness.
The gargantuan budget deficit Hungary just posted for Q1 is going to fare quite badly in S&P’s rating review on Friday. Hungary’s bonds are presently on the last rung of what is considered “investment grade” at BBB-. If they drop one more notch they will be rated as “non-investment grade” or “junk” which is the same rating that can be applied to the Fidesz government itself. S&P might just slap on a “negative outlook” on the BBB- rating but if things don’t improve after that Hungary will be kicked out of investment grade. Watch for S&P’s comments about the prospect of Hungary receiving EU money. It doesn’t look promising. This is a slow-motion train wreck in progress. If you want you can drink an extra shot of palinka and listen to Fidesz happy talk about how good they are for the economy along with their rantings about external enemies.
Initial target for the forint vs Euro is a 50% retracement of the move from its’ 432 bottom Oct/22 to its’ June/23 high of 368 which works out to about 400 forints per Euro from the present 384. There has been a huge “carry trade” of money borrowed in dollars and euros at lower interest rates to invest in forint deposits at higher interest rates. There is a large unwind of that carry trade happening now. Economically Hungary is rapidly becoming a basket case no matter what happy talk Fidesz tries to tell you, The retail sales data clearly shows a rapidly impoverished population. A depreciation of the forint will help exports. It will also make imports more expensive further pressuring retail sales. The long-term trend of the forint is obviously down. We will go beyond a 50% retracement of the forint appreciation as the forint reverts now to long-term trend. The Fidesz government is headed for a major economic crisis as it has blown out its’ budget expenditures and has rapidly declining VAT revenues from decreased sales. Borrowing is hitting limits and interest costs are going to eat up larger portions of the budget. Hungarian bond offerings are going to be rejected by the market. Hungary is going to experience the Chinese curse of “living in interesting times.”
Orban continues to give Chinese ridiculous tax breaks plus free loans to open businesses. In turn, the Chinese just hire Chinese – and Chinese don’t pay taxes in Hungary – all their dealings are in cash. No benefit to the Hungarian economy. Other European companies wanting to spend factories here are given low rents, free loans and tax breaks….who pays for all these financial freebies? Hungarian people.
And if Orban continues to alienate the ret of Europe with his rhetoric and opposition to his responsibilities and commitments within the EU, Hungary may find itself kicked out of the union….then, the country collapses – Orban takes all his money and moves to Spain.