After Hungary’s currency plunged to a record low against the euro on Monday, and then Tuesday, the freefall of the forint continued on Wednesday as well, slipping past 383 to the euro by the afternoon.
Although in response to the intense weakening of the forint, the Hungarian National bank (MNB) already announced on Tuesday that it was ready to intervene at any time to keep the currency stable, it seems the promise was only able to stabilize it for a few hours.
Following Tuesday’s historic low of HUF 379.70 to the euro, by afternoon it slipped below HUF 383.42. Moreover, given the current fluctuations in the currency’s exchange rate, we could easily see more negative records in the coming hours.
The forint’s plunging is clearly a consequence of Hungary’s exposure to the Russian-Ukrainian war, as evidenced by the fall of all regional currencies as well.
The central bank is expected to start a sharp rise in interest rates on one-week deposits by Thursday at the latest, while intervention in the foreign exchange market could also be considered. Hopefully, after that, the forint and other Central European currencies will stabilize.
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