Forint Plunges as PM Orbán Turns to Windfall Taxes against Banks, Large Companies

The forint plunged sharply after Viktor Orbán’s Wednesday announcement regarding the government’s plan to introduce windfall taxes on banks and other large companies. Following the Prime Minister’s statement, the euro’s exchange rate neared 400 forints in less than an hour, while the US dollar’s rate went above 370 forints.

Prior to the announcement, the euro/forint exchange rate was at 386, but after the announcement, the exchange rate shot up to 388 within an hour. Later it reached 389, but by 6 pm the euro was again cheaper than 388 forints.

Then came Viktor Orbán’s big announcement regarding the windfall taxes. As we have reported, in a video published on Facebook, the Prime Minister said that banks, insurance companies, large distribution chains, energy and trading companies, telecommunications companies, and airlines would be obliged to pay the costs of strengthening the army and financing caps on households’ energy bills using their “extra profits” amid the difficult war situation.

Following the announcement, at 7 pm the euro was already over 394 forints, while the US dollar was above 370 forints. This means that in less than an hour, the euro was 6 forints more expensive than before the announcement. Meanwhile, the dollar/forint exchange rate has also exceeded the 390 mark.

Since then, the forint has recovered from the fall and is hovering near 390.

The biggest weakening of the forint this year occurred on March 7, when the forint hit an all-time low, and for a short period of time, one had to pay more than 400 forints for a euro.

The last time the forint fluctuated was after Orbán’s speech at the inauguration of the new parliament; it was followed by a 391 forint-to-euro exchange rate in the afternoon, compared to 385 forint-to-euro in the morning.

Sources: Portfolio, Index

Featured image: illustration via Pixabay