Hungarian Currency at Historic Low Against the Euro

Despite the National Bank of Hungary (MNB) raising the policy rate by a total of 70 basis points in two steps last week, the Hungarian forint (HUF) fell to a new historic low against the common European currency (EUR) on Monday morning.

In one day, the euro exchange rate broke through the psychological barrier of HUF 370 twice: first on Monday morning, then by early evening it broke through this unprecedented level again and weakened to HUF 370.2, the business news site hvg.hu reports.

According to the article, the forint was almost constantly above 369 on Monday, but by the end of the day it surrendered.

Around 5 p.m., the HUF/US dollar exhange rate was also at its low for the year, at HUF 329.17, while the Swiss franc was also at a historic low of HUF 353.3.

According to hvg.hu, the reasons are both foreign and domestic: on the one hand, the dollar is strengthening, which is never good for emerging currencies, and on the other hand, the market believes that the MNB's reintroduction of the dual interest rate regime last week has failed to increase transparency and predictability.

And then, there is the worsening disease data, which could start to undermine the performance of the Hungarian economy.