Hungarian forint may collapse next week

The Hungarian forint strengthened against the euro and the dollar in the last few weeks and reached an annual peak this Tuesday. However, the Hungarian National Bank seems committed to limiting that trend, and the institution already made a decision this week that tossed the forint on the slope. The Hungarian national currency did not start to fall, but the exchange rate decreased by more than HUF 10 per euro. Next week, further negative announcements are expected, affecting the value of the forint.

According to index.hu, on Tuesday, the forint-euro exchange rate decreased below 370, while we had to pay only HUF 339 for one USD. That meant an annual peak against the euro of 369.52/EUR. However, the Hungarian National Bank intervened and talked about a possible loosening in Hungary’s interest policy. As a result, the forint started to fall again and did not stop until 380/EUR. Even though the forint could strengthen by the end of this week to 376/EUR, further negative interventions are expected next week.

Experts say the Monetary Council will narrow the upper end of the interest rate margin. But they will keep the interest rate high during the spring. That is because the forint remained vulnerable considering the financial turbulences of the last few weeks, especially the American bank crisis.

Forint exchange rate determined by the National Bank and the Monetary Council

The national bank did not change the base interest rate in January. That remained at 13 percent and probably will be unchanged next week. Furthermore, the quick deposit will also remain at 18 percent. The latter will only be decreased if the inflation’s moderation rate is steeper and the Hungarian economy’s assessment gets better. That is expected to happen only in the summer. Experts believe the base interest rate will only be decreased in the second half of 2023.

Meanwhile, some crucial economic and social data will be published next week. The Hungarian Central Statistical Office (KSH) will announce the average increase in gross salaries on 26 April, while they will publish the unemployment rate on 28 April.

However, the forint’s exchange rate will be determined by the decisions of the national bank. Of course, we will follow the developments.

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