Since late October, the HUF has been on a rollercoaster ride in anticipation of the momentous days of early November (US election, FOMC). After the US election, EUR/HUF rose to over 410. Last week, market concerns that the successor to central bank chief Gyorgy Matolcsy, whose term of office expires in March 2025, could seek a looser monetary policy in view of the weak fundamentals, also weighed on the forint. The current finance minister, Mihaly Varga, is being discussed as a possible new central bank chief. Last week, the government assured that monetary policy would not change much under the new central bank chief and that there was no risk of drastic interest rate cuts, Commerzbank’s FX analyst Antje Praefcke notes.
After the US election, EUR/HUF rises to over 410
“In this mixed environment, the central bank (MNB) now has to decide on its monetary policy today. Nobody expects the key interest rate to change; it is likely to remain unchanged at 6.50%. But we hope to hear decisive words from the MNB. The currency weakness and the volatility of the forint should be a cause for concern for the central bank.”
“The forint tends to be more volatile and prone to runaway in times of heightened risk aversion, which could require emergency measures by the central bank to prevent further currency weakness. In such scenarios, the exchange rate can become a dominant inflation driver, which is why the central bank would probably like to stop these developments early on.”
“Although the forint has recovered somewhat, the last two weeks have shown how vulnerable it is. In this respect, the MNB should show resolve today, even indicating raising interest rates again if necessary, in order to clearly signal to the market that it is prepared to stabilize the exchange rate. The focus of today's meeting is therefore less on current inflation trends and the key interest rate per se, but rather on demonstrating responsiveness and resolve in the face of deteriorating market conditions, and thus stabilizing the HUF.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.