Despite delivering its biggest rate hike since 2008 on Thursday, the decision of Hungary’s central bank was unable to keep Hungary’s forint afloat for more than a day. On Friday, for the fifth consecutive day, the Hungarian currency fell to another historic low, at one point trading at 386.81 against the euro.
Hungary’s central bank raised its one-week deposit rate by 75 basis points to 5.35% at a weekly tender on Thursday, the biggest rate increase since 2008 as the impact of the Russian-Ukrainian war has taken its hit on Hungary’s financial market.
The National Bank of Hungary (NBH) used the one-week deposit rate to tackle short-term market volatility. However, the decision clearly did not achieve the desired result.
The forint fell to a new all-time low against the euro early Friday afternoon. After an hour of weakening, it sank to a shocking 386.81 per euro.
The forint also hit new lows against the dollar and the Swiss franc: 354.10 and 384.97 forints, respectively.
Given the unpredictable situation caused by the Russian-Ukrainian war, the devaluation of the forint may continue.
Meanwhile, the NBH on Friday reiterated to Reuters that it is ready to act to ensure the stability of the local financial market.
Featured photo by Hungary Today