The Hungarian currency can once again have a bad week behind it. The recent weakening of the forint was enough to keep the EUR/HUF cross rate close to the level of 400. In addition, perhaps the most important event of the month is coming, which investors can eagerly await.
Forints – America bet
The dollar has been able to show an extraordinary strengthening in the recent period, and this is perhaps one of the most important things that we should highlight when examining the movement of the forint. The published analyzes and evaluations have often pointed out that the strength of the American currency is not good for the perception of vulnerable currencies. The forint also belongs to the latter. In addition, it is worth taking a look at the development of American stock indices. A long-unseen fall is seen in the main international indices.
There can be several reasons for a fall. The Iran-Israel conflict naturally increases the uncertainty of investors. Not to mention that the American macroeconomic data show less and less that the Fed would implement large interest rate cuts this year. However, this is not very good news for the market mood, risk appetite, and thus not for the forint either. It is therefore worthwhile to continue to follow the factors mentioned above. Even these can influence investors’ perception of the forint, and thus also when it is appropriate to exchange euros for vacation.
The MNB decides
However, the international market sentiment may not be the most important thing now, at least as far as Tuesday is concerned. That is when the Monetary Council of the Hungarian National Bank (MNB) holds its interest rate-deciding meeting. It will be revealed to what extent the central bank management will modify the base interest rate, which currently stands at 8.25%. Gyula Pleschinger, a member of the Monetary Council, recently indicated that there may be a slowdown in the pace of interest rate cuts. To what extent this will be the case will be revealed on Tuesday, when, in addition to the decision, we will also have to pay close attention to the central bank’s communication.
According to the VIG analyst’s analysis in March, the interest rate advantage is particularly important for the forint, which also depends on the MNB’s policy. A possible weakening of 10-30% was also mentioned in the article published at the time on Portfolio.hu. The extreme value of this would mean well over HUF 500 euros, and we are still very far from that at the moment.
The information and analyzes described in this article reflect the personal opinion of the author. What is described in this article does not implement CXXXVIII of 2007. Act (hereinafter: Law) Section 4 (2). investment analysis according to point 8 and investment advice according to point 9. When making any investment decision, the appropriateness of the given investment can only be determined by a personalized examination of the given investor, which this article does not undertake and is not suitable for. Before making individual investment decisions, get detailed information from several sources and, if necessary, consult with a personal investment advisor!
