The Hungarian forint weakened today after the nation’s central bank performed an interest rate cut yesterday. The general market sentiment was not helping the currency either.
The Magyar Nemzeti Bank (the central bank of Hungary) reduced its main interest rate by 20 basis points to 3.8 percent at yesterday’s meeting. The bank explained its outlook:
In the Council’s judgement, Hungarian economic growth is likely to recover gradually this year; however, the level of output remains below its potential and unemployment exceeds its long-term level determined by structural factors. The Council expects weak demand conditions to persist, which ensures that inflationary pressures in the economy remain muted in the medium term.
The market sentiment was not favorable to riskier currencies of emerging markets. Prospects for a war in Middle East made investors unwilling to risk.
USD/HUF rose from 225.1100 to 225.4600 as of 1:19 GMT today. EUR/HUF advanced from 301.4900 to 301.7800, while its daily high was at 301.9400.
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