Forint on a slope again, and the worst may come next week
Forint broke crucial barriers this week, reaching the 390/EUR level again. That means the Hungarian national currency may weaken to 395/EUR next week, so the 400/EUR psychological barrier will be closer than ever before in the past half year. Forint was above 400/EUR last December.
As we wrote earlier, statements about possible tax increases in the banking sector mentioned by Hungary’s finance minister at a Thursday conference harmed the forint considerably. Furthermore, Hungary’s national bank governor, György Matolcsy, slammed several government measures, including the price cap schemes and the skyrocketing expenditures before the 2022 general elections. As a result, the forint hit 388/EUR by Friday but has not stopped there.
The Hungarian national currency continued its journey on that slope over the weekend. Currently, it stands above 390/EUR, and experts believe we should not expect anything good in that regard next week.
The weakening of the forint started with the interest rate decision of the American Fed. The American bankers did not change the rates, which hit the forint hard. According to Világgazdaság, a Hungarian economy-focused news outlet, the forint may weaken to 395/EUR next week.
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US dollar and Hungarian officials hit the forint
The news outlet said the forint had several resistance levels in the 380-395 zone. Some were weaker than others, but all had been broken. In the first half of the week, the forint exceeded the 381.95–383.25 and 383.76 resistance levels. On Thursday, it left the 383.75 moving 30-day average. Later, the weaker resistance level of 386/EUR fell and, on Friday, the stronger one at 389/EUR.
Apart from government and national bank statements, another reason for the forint weakening was the strengthening of the US dollar. That is because more and more Fed officials talk about higher interest rates than expected before. Since investors search for such assets, they acquire dollar, keeping its currency exchange rate high. That is bad news for emerging currencies like the forint.
According to Világgazdaság, the forint may continue to weaken next week without any external impulses. That means it will probably reach the 395/EUR level. Another bad news is that the so-called golden cross appeared on the dollar graph, meaning the 50-day moving average closes above the 200-day moving average. Furthermore, the forint may drop out from the league of carry traders because of the expected decrease of interest rates.
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