What happened? The Hungarian forint cannot stop weakening

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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.

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