Hungarian Companies Want a Stable Forint

Hungarian business leaders say they do not want a strong or weak exchange rate, but stability, according to an analysis by the financial news site portfolio.hu.

The exchange rate of the Hungarian currency, the forint (HUF) against major currencies like the euro or the US dollar has been helped by high interest rates, but business organizations say it has also stopped market lending.

The forint has come a long way in the past six months. After reaching a historic low of over 430 against the euro last October, it strengthened by nearly 60 units by the beginning of March, before heading back down again in recent days.

At the beginning of last year, the euro was around 350 forints, but in the midst of the war, the domestic currency weakened to 430, showing how vulnerable the Hungarian currency is. It has become one of the worst performing currencies not only in the region but also globally. However, a turnaround followed, partly due to reduced uncertainty about EU funding and partly due to record high Hungarian interest rates (18%).

By March this year, the forint had approached the 370 level, but its strength did not last long, as uncertainty over the US banking system pushed it back to around 400. However, even this is a much stronger exchange rate than the one seen last fall, with businesses expecting an exchange rate even worse than last year based on the trends of recent years.