Last night Israel attacked Iran, as a response to last weekend's retaliatory drone and missile attack against Israel.Continue reading
Israel’s announcement of a retaliatory strike against Iran has made investors uneasy, and last week, stock markets, including domestic ones, took a downward turn, fearing an escalation of the Middle East conflict, Gergely Horváth told Index.
The forint also weakened significantly against the euro and the dollar during last week, with the war conflict playing a major role. The forint started last week at 392 against the euro, but the exchange rate started to weaken from Monday morning. It may have been influenced by the negative international sentiment following the conflict in the Middle East, typically affecting emerging markets, as the Polish zloty also depreciated against the euro, Macronome Institute’s analyst, Dániel Molnár said.
The exchange rate was not helped by the euro’s continued inability to strengthen against the dollar in the wake of the Fed’s increasingly delayed monetary easing, leaving
the forint weakened to levels not seen since early October last year, above 372 against the dollar.
Molnár pointed out that the Hungarian National Bank’s verbal intervention on Wednesday morning brought a temporary change. Zsolt Kuti, chief economist at the Hungarian National Bank (MNB), added that the role of the forint exchange rate has become more important for the central bank in terms of financial market stability, although the exchange rate target remains absent from monetary policy, and reiterated that the central bank may slow the pace of interest rate cuts at its April meeting. The announcement caused the forint to strengthen back below the 393 level against the euro.
This week, the Hungarian Central Statistical Office (KSH) will publish several statistics that can have an impact on the forint: on Wednesday, the February earnings report, while on Friday, the March employment and unemployment rate will be released. At the same time, investors will focus on the MNB, with the central bank holding its interest rate decision meeting on Tuesday, Molnár stressed. In addition, the first rating decision this year on Hungarian government debt is due on Friday evening.
The first of the major rating agencies is S&P, which currently has a BBB- investment grade rating on Hungarian government debt with a stable outlook. According to the expert, there will be no change in the rating.
Gergely Horváth, an analyst at the Macronome Institute, told the news site that the gloomy international mood has also affected the Budapest stock market. Iran’s attack against Israel last weekend has not yet particularly shaken investors, and Monday’s trading day was normal.
However, Israel’s announcement of a retaliatory strike against Iran had investors worried, and on Tuesday, stock markets, including domestic ones, took a downward turn, fearing an escalation of the Middle East conflict,
the expert highlighted. He noted that among the blue chips that are particularly sensitive to international investor sentiment, Magyar Telekom was the only one to post a gain, while OTP, MOL, and Richter all posted significant losses during the week, dragging the BUX index down with them.
On the positive side, among mid-caps, PannErgy’s share price rose by more than 6%. This was due in part to the production report published by the geothermal energy company, indicating above-average heat sales in the first quarter, Horváth added.
Ottó Grád, secretary-general of the Hungarian Petroleum Association, told Index that the Iranian drone attack is not reflected in oil prices. According to him, seasonal effects are behind the current fuel price changes. Of course, this does not exclude the possibility that a possible Israeli retaliation could send oil prices skyrocketing.
It is not at all excluded that there could be further moves, either of a war nature or economic steps affecting the oil trade,”
Grád concluded.
Via Index; Featured image via Facebook/Israel Defense Forces
