A little recovery
The forint strengthened by about 2 units to 387.3 in the last hour against the euro after the rapid and significant fall in the morning. For the time being, there is no meaningful respite for European bank stocks either, although Deutsche Bank’s exchange rate has returned from close to -15% to -13%, UBS’s from -8% to -7%, and the euro/dollar has also risen slightly 1, 0720 to 1.0740. The American actors are slowly starting to get involved in market trading, so their role and reaction will be important when seeing the considerable European movements.
The forint is falling
The Deutsche Bank share price fell by 12-13%, which left its mark on the entire European banking sector. The euro is currently quoted at around 389.4, although last night it was still around 382, and this morning it was trading between 383-384, so we see a drop of one and a half percent forint in a few hours. Due to the jump of the dollar, the decline against it is 2.5%, the quotations are above 362 and the American actors will only start to get involved in the trading.
Deutsche Bank breaks down, which drags down both the euro and the HUF
The market concerns surrounding Deutsche Bank have increased even further, the bank’s share price is already down 11%, which is a multi-month low, and this is affecting the performance of the entire European banking sector, and the euro is also being hit against the dollar, in this environment and the forint as well. The euro/dollar is already around 1.073 after 1.0820 in the morning, i.e. the dollar is jumping and in the gloomy mood the forint was already hit above 388 against the euro, and up to 361.5 against the dollar. The forint is down 1.2% against the euro and 2.1% against the dollar, while the zloty is down 0.1% against the euro and the Czech koruna is only down 0.3%. Even now, it stands out that as soon as the mood deteriorates, the forint is hit immediately and to a much greater extent than its regional competitors.
Compared to the regional currencies, much larger swings and considerable relative underperformance have been evident since the beginning of March, as well as today:
If we look at the exchange rates of the three regional currencies against the euro from January of last year before the outbreak of the war, it can also be seen that the forint is also the most underperforming with a fall of more than 5%, while the zloty essentially stagnated and the Czech koruna was able to strengthen.
The sudden fall of the forint has stopped, but the market is nervous about the big European banks
The rapid fall of the forint characteristic of the first half of the morning has stopped, the euro is now quoted at around 387, but the market nervousness due to the big European banks is still high, which can bring about further large swings in the forint exchange rate at any time. Last night, the US Department of Justice initiated an investigation against Switzerland’s Credit Suisse and UBS, whether their executives helped rich Russian businessmen evade anti-Russian sanctions already in effect. And today, partly for this reason and partly for the reason that the price of Deutsche Bank’s insurance against bankruptcy risk continues to rise sharply: on Wednesday the price of the 5-year CDS closed at 142 bp, yesterday it jumped to 173 bp, on Friday and it is already around 210 bp according to intraday data from Markit, although it was still around 80 bp in the first days of March. Deutsche Bank’s share price is down 8% on Friday morning, which drags down the results of other sector peers, and these concerns are now overshadowing the fact that otherwise all the French, German and Eurozone purchasing manager indices were better than expected in February, according to today’s data releases.
The forint has already lost its strength from yesterday, it is getting worse
The fall of the forint continued at a rapid pace in the interbank market in addition to the deteriorating foreign market sentiment, as the euro was already above 388, i.e. a drop of 1.2%, while the Polish zloty is only down 0.3%.
In the figure below, it is clear that the forint shows greater volatility again, just like in the first days of the outbreak of the American and European banking crisis, and today the banking sector in Europe has started to be hit again. Thus, the forint is falling sharply again in the face of deteriorating sentiment, with the central bank’s interest rate being by far the highest in the region.
The dollar strengthened against the euro to 1.077 despite the better-than-expected French and German bmi data, so with the falling forint, the dollar/forint quotes jumped back to 360.
They hit the HUF after the big march
After the small weakening in the morning, in the last few minutes, the forint suddenly hit 386 against the euro, parallel to the fact that the dollar also jumped against the euro (it strengthened to 1.078 from 1.0820). Then the forint strengthened against the euro to 385, but based on the drawn line, it can be seen that this week’s trend of rapid strengthening of the forint has been broken, and the exchange rate is moving above the line.
Due to the strengthening of the dollar and the weakening of the forint, the dollar/forint quotes jumped back to 358, even though they were around 351 last night. According to the signs, the support zone around 350 is still working.
The forint began to weaken
Yesterday afternoon, the forint was below 383 against the euro, and from there it corrected back a little in the evening. And this morning it continues, the euro exchange rate around 384.3 is 0.2% higher than on Thursday evening. At the same time, as in recent weeks, the volatility of the exchange rate is still high, which means that the direction can easily change. Against the dollar, we are now around 355, while the British pound costs HUF 435.35.
Among the forint’s competitors, the Polish zloty and the Czech koruna are starting the day with stagnation. And in the emerging market, the Turkish lira lost 0.1 percent against the dollar, and the Russian ruble weakened by 0.4%.
The dollar started to weaken after the Fed meeting on Wednesday, but this trend seems to have stopped. On Friday morning, the euro-dollar quotation is around 1.083, which has been above 1.09 in recent days. The Japanese yen opened the day up 0.3 percent, and the British pound is marginally weaker against the dollar.
Cover image: Getty Images