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The exchange rate of the forint weakened on Tuesday morning compared to its quotation on Saturday night against major currencies in the international foreign exchange trade, reports Világgazdaság.

On Tuesday, shortly before half a week ago, the euro weakened to 394.17 forints from 394.31 forints on Saturday night,

the dollar fell from HUF 370.34 to HUF 369.83, and the Swiss franc fell from HUF 406.03 to HUF 405.50.

The euro fell to $1.0658 from $1.0647 on Saturday night.

The HUF 400 exchange rate can still test the MNB’s nervous system – another tug of war is coming on Tuesday

The interest rate reduction period of the Magyar Nemzeti Bank may enter a new phase on Tuesday, and at the next interest rate decision meeting of the monetary council, there are all signs that the pace of interest rate reductions will slow down. The last time the central bankers met was a month ago, after a month of temporary acceleration, they lowered the base interest rate by 75 basis points to 8.25 percent. At a background meeting held after the decision, Vice President Barnabás Virág announced that from the second quarter, monetary policy will enter a new phase by switching to a slower rate after the previous 75-100 basis point interest rate cuts.

I expect an interest rate cut of fifty basis points and we can proceed at this rate in the next two months

– said Zoltán Török, Raiffeisen Bank’s lead analyst, to Világgazdaság, who expects the MNB to stick to its communication and not speed up interest rate cuts. The reason for this is that the stability of the forint exchange rate has increased in value for the central bank. As he said, previously it was difficult for him to understand exactly what his position was on the issue, but now he is trying to make it clear that in order for inflation to stay close to the central bank’s tolerance band, he needs a non-weakening forint exchange rate.

According to Zoltán Török, unless something dramatic happens, the base interest rate may drop to between 6.5-7 percent in June, which could even end the interest rate-cutting cycle for a while.

The analyst sees that the MNB may decide this way at most once or twice in the second half of the year, in which waiting for advanced central banks plays a major role. Neither the European Central Bank nor the FED has yet started to cut interest rates, and this also determines the central bank’s room for maneuver.

Source: vg.hu
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