On Tuesday, the central bank announced that it would cut its key interest rate by another 100 basis points, bringing it closer to the base rate. In its letter, the central bank stressed that they will continue to proceed cautiously on the interest rate path. Meanwhile, the forint strengthened, reaching nearly the 380 level against the euro, which corresponds to a one-month high. According to Gergely Suban, senior analyst at MBH Bank, the sharp weakness of the dollar was the reason behind the forint’s appreciation, not the central bank’s decision and connections.
Under the Monetary Council’s decision issued on Tuesday, the ruling interest rate will be 14 percent as of Wednesday. Meanwhile, according to analysts’ forecasts, the Hungarian National Bank did not change the central bank’s key interest rate of 13 percent.
Even before the central bank’s decision, the forint had risen from Tuesday morning’s level of 383 to nearly 381 against the euro at noon. After the background discussion that followed the interest rate decision, the forint rose further, reaching 380.87 forints for 1 euro at 4 pm.
After the central bank’s interest rate decision, the forint reached a one-month high against the euro.
The Hungarian currency’s momentum continued on Wednesday morning, at 10:30 am, with one euro valued at HUF 380.32.
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“The forint reacted neutrally towards the expected interest rate decision and the fact that the multinational national bank continues to stress caution,” Gergely Suban said in his analysis sent to our newspaper.
The forint reacted to the sharp weakness of the dollar by strengthening decisively, breaking the 200-day moving average.
– The chief analyst at MBH Bank explained in detail that the dollar fell sharply against the euro and major currencies due to an unexpectedly large drop in job vacancies and consumer confidence, which dampened expectations of a rate hike. Thus, the chance of maintaining interest rates in September rose to 87 percent. Meanwhile, the zloty stagnated and the value of the Czech crown rose slightly.
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