The forint has already made up almost half of its fall, the MNB decision will come on Tuesday
In the afternoon trading, the HUF strengthened a little more, and thus by the evening the quotations against the euro stabilized at around 348, and those against the dollar at 346. As can be seen in the figures below: by now, the forint has already recovered almost half of the fall it suffered in the second half of last week, until Friday morning.
The forint is strengthening
Before tomorrow’s interest rate decision, the forint is gaining a little, it became 0.3% stronger than it was yesterday. HUF 374 is now 60 fils to one euro. The dollar weakened 0.1% against the euro today, the quote is above 1.08. So there is not much movement in the foreign exchange market today.
Development of the EUR/HUF exchange rate
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The forint is on the sidelines, there was no big movement in the morning. HUF 375 now costs 50 fils to one euro, which practically means no change compared to Friday.
Development of the EUR/HUF exchange rate
They bought into the forint after last week’s fall – The market is already paying attention to the interest rate decision
On Monday morning, the forint was around 374.1 against the euro, which represented a 0.4 percent increase compared to Friday evening’s level in terms of the Hungarian currency. Last week, the forint was below 370, but in the second half of the week we saw a significant weakening of the forint, during which the quotation approached the level of 380. This can be justified by the strengthening of the dollar and the caution regarding Tuesday’s interest rate decision. There is a good chance that the Monetary Council will reduce the key interest rate after a long time, but it is expected that they will continue to emphasize the importance of the fight against inflation. According to analysts’ expectations, the central bank may announce the one-day deposit tender on Wednesday morning already 50-100 basis points lower than the current 18 percent. The question is whether the weakening of the forint last week will hold the central bank back from the first interest rate cut, and if the process of monetary easing starts, what effect it might have on the exchange rate. Against the dollar, we are now around 346.7, while the British pound costs HUF 431.6.
Development of the EUR/HUF exchange rate
Among the forint’s direct competitors, the Polish zloty and the Czech koruna started with a 0.2 percent increase against the euro. In the emerging market, the Turkish lira continues to hold up relatively well, but before Sunday’s presidential election, the ground may heat up, and the Russian ruble started to gain more than half a percent against the dollar.
We mentioned that the strengthening of the dollar last week was also bad for the forint, but now it seems that it was only temporary, the quotation quickly returned to above 1.08. This morning it is at 1.082, which represents another 0.15 percent dollar weakness. In the next few days, it will be worth paying attention to news related to the American debt ceiling, as the United States may file for bankruptcy next week if an agreement is not reached. The Japanese yen and British pound have barely moved against the dollar so far.
Development of the EUR/USD exchange rate
Cover image: Getty Images
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