Hungarian forint fell sharply, not helped by the news from America
The forint was able to strengthen on Monday morning after three important announcements from the US authorities on Sunday night, which eased concerns about the overall problems in the US banking system and strengthened risk appetite. However, all this was reversed in the morning as foreign risk appetite deteriorated sharply again and this also started to weigh on the forint, which fell to a one-month low.
Market perceptions of the state of the US banking system and its potential impact on the Fed’s rate hike plans will continue to drag on the forint for the rest of the week, Portfolio writes.
Around noon, it was also reported that after a rapid fall in the last half hour, a turnaround in the forint exchange rate was seen: the euro’s rate fell back from above 388 to below 387, while the dollar’s rate dropped from 364 to around 362. However, before one hour, it was reported that the euro had jumped back above 388 on the interbank forint market and the dollar to 364, amid continuing negative international investor sentiment.
This means that concerns about the US banking system (and its potential spill-over effects) have not yet subsided, even with the coordinated US announcements last night. In fact, the market may now be driven by a “flight to safety at any cost”, as such a major bank failure happened almost overnight and many investors are now running for cover until valuations are completed and the “storm” subsides.
Before 2pm, sellers were again on the attack, with the euro trading above 392, at 393.4 forints. After a rapid fall in the forint in the early afternoon, which also saw euro quotes above 393, a slight stabilisation and easing was seen around a quarter to three, with euro quotes hovering around 391.
But, as the portal wrote, this still means that the forint is trading almost 10 points above its morning quotes and has fallen sharply compared to the rest of the regional currencies, with the Polish zloty and the Czech koruna only down around 0.4-0.5%.
Against this backdrop, America was rocked by a bank failure not seen since the 2008 financial crisis, after depositors stormed Silicon Valley Bank, known as a bank for start-ups, last week. On Sunday, the Fed announced extraordinary measures to prevent financial contagion, and it emerged that another financial institution, Signature Bank, had been ordered to close by regulators. On Monday, there were still big questions about the consequences of the bank failure.
Source: