The forint weakened to 383
The forint remained relatively stable against the euro and the dollar throughout the day, but the domestic currency began to weaken in the evening. The quotation against the euro jumped from the previous 379 to 383, and against the dollar the exchange rate went up to 362.
The EURHUF exchange rate has broken the three-month downward trend line, as a result of which the HUF will be under further pressure tomorrow.
The weakening of the forint must have played a role in the fact that the mood on the American stock markets has deteriorated as well, as investors are waiting for tomorrow’s labor market data.
The HUF is stable despite government announcements
Apart from the wave of weakening in the morning, the forint showed no significant movement today: the quotes against the euro stuck around 379 despite today’s government announcements and the relatively weak government bond auction, although the euro/dollar exchange rate also only went sideways – apparently investors are waiting for tomorrow afternoon ahead of February’s comprehensive US labor market data arriving at 3:30 p.m., which may have a big impact on the Fed’s interest rate policy.
As the euro/dollar exchange rate largely sided around 1.055 today, so did the dollar/forint for the most part around 358.
In addition to today’s relatively weak Hungarian government bond auctions, the secondary market for government securities showed only a small increase in yields for most maturities.
The forint cannot sustain a permanent weakening, even though the dollar is strong
The message of Fed President Jerome Powell’s speech on Tuesday afternoon (further interest rate hikes are needed due to the unexpectedly strong US macro data) brought a considerable strengthening of the dollar, which did not weaken on Wednesday: the quotations were stuck around 1.055 throughout.
The sudden strength of the dollar usually weakens the forint among regional currencies, but this did not really happen on Tuesday, and only temporarily on Wednesday (partly as a result of the MNB’s message that there is a principled conflict with the government and that interest expenses are driving the country), moreover, the regional currencies only weakened for a short time, even though their interest rate is much lower than that of the forint (which has a one-day deposit rate of 18% since October).
In addition to the temporary weakening, the drawn downward trend line is still intact, so technically the forint may continue to strengthen, i.e. the EURHUF may fall. Obviously, Friday’s comprehensive US labor market data will be of particular importance, because if the Fed confirms the need for further interest rate hikes, it may redraw the risk map for regional currencies as well and lead to currency weakening.
Together, the fluctuations of the dollar and the relative strength of the forint keep the dollar/forint exchange rate below 360: this morning, trading is currently around 358.
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