What happened? The Hungarian forint lost two weeks of strengthening in hours
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In the past two weeks, the Hungarian forint has been doing exceptionally well, strengthening to annual highs. However, this fragile trend was broken on Wednesday. The Hungarian currency lost two weeks of strengthening in just hours.
An unexpected surprise from the central bank…
As we reported on Wednesday, an interview with the vice-president of the National Bank of Hungary knocked down the forint. Barnabás Virág told Világgazdaság that “extreme risk scenarios have been priced out, there is no longer a need to maintain such a large margin, so a decision on a more significant narrowing of the upper end of the interest rate corridor could be taken at next week’s Monetary Council meeting.”
…rapidly depreciating forint
So, on the news that the central bank may touch the upper end of the interest rate corridor as early as next Tuesday’s meeting, the forint seemed to have taken a real tumble. From close to 371 on Wednesday morning, the forint fell to 377.5 against the euro and to 345 against the dollar by midday, Portfolio writes. This happened right after the forint hit a new one-year high just yesterday. The central bank’s surprise statement seems to have been received sensitively by investors.