The forint did not move much in the evening
Since the weakening after 5 o’clock in the afternoon, the exchange rate of the forint has not moved much, it hovers around the level of 390.9 against the euro.
Sharp reversal in the forint, the euro is again above 390
The forint initially reacted to the tone-deaf messages from the MNB by strengthening, the euro quotes were temporarily at 387, and then there was a sharp turnaround following the market’s digestion of the announcements, and because the dollar gained strength again in the meantime, and the 10-year US bond yield It jumped again from 4.5% to 4.55%. As a result of all this, the forint fell to 391 against the euro in the early evening, and to 370 against the dollar.
The forint strengthens on the words of Barnabás Virág
Barnabás Virág, the MNB’s vice-president responsible for monetary policy, is holding his press conference at the moment, and the forint began to strengthen at the same time as the event. The quote against the euro strengthened below 388, HUF 387 is 80 fils to one euro, a gain of 0.6%.
Development of the EUR/HUF exchange rate
The announcement is out
The Magyar Nemzeti Bank has just published its announcement after the interest rate decision meeting, in which the changes to the key interest rate were explained, as well as the decision regarding the instrument portfolio. The forint did not move significantly on the news, it is still strengthening by half a percent.
Development of the EUR/HUF exchange rate
It got stronger
There are a few minutes left until the MNB announcement and Barnabás Virág’s press conference, the forint was able to strengthen further before the event. The forint is now gaining 0.5%, 388 forints costs 40 fils to one euro.
Development of the EUR/HUF exchange rate
The decision has been made, the forint barely moves
The MNB’s decision met expectations, and accordingly the forint did not move from its previous level against the euro. HUF 289 and 30 fils are now one euro, which means a 0.3% increase. The announcement and Barnabás Virág’s press conference will come at 3:00 p.m., and they can still move the subscription.
Development of the EUR/HUF exchange rate
The forint strengthened further
The forint managed to strengthen more than an hour and a half before the interest rate decision, one euro now costs HUF 388 90, which means a 0.3% increase. The interest rate decision will arrive at 2 p.m., and the announcement will arrive at 3 p.m.
Development of the EUR/HUF exchange rate
Here’s the twist
There is a turnaround in the forint, it is already gaining 0.1% against the euro, HUF 389 now costs 70 fils to one euro. The movement of the dollar against the euro may have contributed to the turnaround, in addition to the usual movement before the MNB’s decision in the afternoon.
Development of the EUR/HUF exchange rate
US bond market processes pose a threat to the HUF
The messages of our previous post were echoed in this morning’s foreign exchange market newsletter of ING Bank, according to which the rise in US bond market yields (the interest rate path has moved up due to Fed messages, the downgrade warning from Moody’s due to the risk of a government shutdown) and the increase in bond market volatility pose an increased threat to the main carry trade currencies and the forint is specifically mentioned alongside the Mexican peso.
In the meantime, Finance Minister Mihály Varga started speaking at the Focus on the HUF conference, which we report on in this news feed. Among the topics is the bank tax, which is also important from an investor’s point of view, and meanwhile the Ministry of Economic Development Márton Nagy issued a statement on this today.
For the time being, the forint is fluctuating above 391 on the interbank forint market, while due to the above, the dollar strengthened against the euro even further to 1.057, so the dollar/forint quotes are standing close to 370.
Development of the EUR/HUF exchange rate
Development of the USD/HUF exchange rate
The forint fell to a six-month low against the dollar, which was gaining momentum
Yesterday, the forint fell to an almost three-week low against the euro, close to 392, and remained above 390 in the evening, and this morning it is still trading around 391.
The fact that the MNB is expected to continue cutting interest rates today will exert downward pressure on the HUF, the overnight deposit may merge with the benchmark rate at 13%, and the main question from here on will be at what pace the central bank will proceed. Among other things, this is influenced by the direction of the negotiations regarding EU funds, but the prime minister’s speech at yesterday’s parliamentary season opening was not very clear in this regard either. On the one hand, Viktor Orbán said: he is convinced that by the end of the year the 3 billion euros of EU money can flow in, which is also important in reducing this year’s budget deficit, but he also said that the government does not support the interim review of the 7-year EU budget and the support program in Ukraine, although the two topics are interconnected.
In addition to the above, as an external reason, the forint is also depressed by the fact that after the Fed’s interest rate decision last week, the dollar is still on the rise, as it signaled that there could be another interest rate hike and that the interest rate path for next year could be much higher than what the central bank had previously suggested . Meanwhile, yesterday the President of the ECB outlined that the interest rate hikes in the Eurozone may have ended and the first cut may occur around next summer, so this further strengthened the dollar against the euro, a half-year low has now formed around 1.058. This was further reinforced by the fact that Moody’s sent a warning to American political leaders last night that it would be a negative credit rating event if the new 2023-2024 federal budget, or at least a temporary spending authorization, could not be put together by Saturday, so so possible downgrade concerns could also further push up the 10-year US bond yield, which this morning is already hovering around 4.55%, at a 16-year high. This may also have an upward effect on Hungarian government bond yields, especially in light of the fact that the Hungarian 10-year yield has fallen back to around 7% amid interest rate cut expectations. As we pointed out last night: in the meantime, a key level in the euro/dollar fell around 1.0620, and this morning the exchange rate is already around 1.0580, and the strength of the dollar is usually not good for the forint among emerging market currencies.
Due to the above, the forint is under devaluation pressure and as we can see in the first figure below: with the downward trend line breaking upwards, the next important level is now at 392, above it is the 38.2% Fibonacci correction level at 393, and then 395 , and the 400 zone, should the HUF fall further.
Due to the strength of the dollar and the weakening of the forint, the exchange rate against it jumped to 370 last night, i.e. the forint fell to a six-month low and is still trading above 369 this morning. Here, you should pay attention to the 377.5 and then the 380 levels.
Cover image source: Shutterstock
