Forint-weakening will have a devastating impact on Hungarians
The Hungarian forint is at an all-time low: it was at 412 against the euro on 6 June. Three economic analysts explain exactly what impact this has on our daily lives. There’s no good news: sooner or later, every single Hungarian citizen will feel this historic plunge, and directly on their skin. Continue reading below to find out more information.
The forint weakened to over 410 against the euro on Wednesday morning, and 412 shortly after noon Which is a 0.7 percent increase compared to Tuesday, a day before. In a video published on Wednesday morning, Gergely Csiki, Director of Portfolio, and Károly Beke and József Hornyák, analysts, tried to answer a few questions. They were searching for answers to what this exchange rate level will mean for the Hungarian people in both the short and long term.
A word for the Hungarian Ministry of Finance
As previously mentioned, the forint has been taking a beating for several days. Its exchange rate against the euro is repeatedly hitting new all-time highs this week. Despite all this, the government has not directly commented on the forint exchange rate. Until Wednesday afternoon, when the Finance Ministry sent a reply to Telex’s query.
Word for word, the government states the following: “War and sanctions from Brussels are bringing an economic crisis, war inflation, price rises and uncertainty across Europe. Only peace can end war inflation. That is why the government is pushing for a peace settlement and to avoid new Brussels sanctions that harm Europe.”
How inflation will affect Hungarians
The forint was already at a weak level with the beginning of the war, elaborates Pénzcentrum. It has been in a continuous weakening trend for the last 3-4 years and has now reached a low, even against the surrounding currencies. In addition, the Hungarian economy imports a lot of inflation from abroad: this means that a lot of goods arrive from other countries, so inflation there is also captured by us. Hungarian households will also be affected, and analysts say that even the common citizens will feel the worsening of the situation.
There are several reasons why this is the case. The above source lists the following points as most notable:
- Prices highly differ abroad compared to Hungary
- The Hungarian economy is not self-sustaining, as it needs considerable amounts of import goods. These have to be paid for in foreign currency. Because of this, consumer prices will see a reasonable increase in the coming months.
- It has never been harder calculating the further weakening of the forint. Market experts are unsure when it will stop.
- Jobs in Hungary will not be able to keep up with foreign pay rates. A EUR 2,000 pay can mean a HUF 100,000 difference. This is the reason why the job market here in Hungary may take a huge blow.
Source: telex.hu, penzcentrum.hu, portfolio.hu