Experts who spoke to the index already on Sunday pointed out that Tuesday's interest rate decision could lead to violent movements in the forint exchange rate, and a rate cut could hinder the possibility of further strengthening of the forint.
On Tuesday, the central bank decided to cut interest rates by 25 basis points, and the Hungarian franc took a step back.
From a level below 390 in the morning, the Hungarian currency jumped well above 391 against the euro. The forint's weakness had already begun, but after the interest rate decision, it turned to a higher level. At around 4 p.m., one euro was worth 391.46 Hungarian forints.
Could the trend-like forex boost end?
In the following week, a slight but trend-like strengthening of the forint could be observed – as Zoltan Arocszalasi, director of the MBH Analytical Center, pointed out. There were international and domestic reasons for this. On the one hand, the strengthening of the euro against the dollar. We only saw a change in this on Friday, when the dollar started to strengthen against the euro.
This was not a big surprise, because due to the global IT problem, mainly airlines, but also banks, healthcare providers and a number of other places of work, were forced to close, which also worsened investor sentiment, and this is usually accompanied by a strengthening of the dollar.
The expert explained. The strengthening of the forint during the week may also have contributed to the improved perception of Hungarian risks. Incidentally, this was also a decisive factor in the multinational bank's interest rate cut.
(Cover photo: Emilia Nemeth/Index)
