The Hungarian Forint reached a ten month record of 346 to the euro on Tuesday after its value suddenly began increasing on Monday. Economists project significant GDP growth for Hungary this year.
The forint’s increase in value is far better than where it stood one month ago, at 360 to the euro. According to Portfolio, the sudden jump can be attributed to the boom in Hungarian GDP, as well as Hungary’s statistics on the Purchasing Managers’ Index improving. Both of these strengthen the expectation that the Hungarian National Bank (MNB) will begin raising interest rates.
Vice President of MNB, Barnabás Virág, confirmed that the bank’s intentions are to raise interest rates in order to reduce inflation, an approach which has not been heard of in a decade. Despite being a verbal statement without action, it still improved the value of the Hungarian currency.
In this year’s first quarter, Hungary’s GDP grew by 2 percent compared to the last three months of 2020. Stronger growth is expected thanks to production in industry and construction, as well as, surprisingly enough, the service sector.
Péter Virovácz, lead economist of ING Bank, said that despite the damaging conditions of the pandemic, the service sector ended up growing by 2.2 percent. Most of this growth revolved around shipment, storage, information, communication, and professional scientific activity.
ING Bank expects a 7.4 percent growth of GDP this year, which would be Hungary’s fastest recorded economic growth according to current methodology.
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