Sign up to create alerts for Instruments,
Economic Events and content by followed authors
Free Sign Up Already have an account? Sign In
Quotes
All Instrument Types
- All Instrument Types
- Indices
- Equities
- ETFs
- Funds
- Commodities
- Currencies
- Crypto
- Bonds
- Certificates
Please try another search
🚨 Our Pro Data Reveals the True Winner of Earnings Season Access Data
Forint On Course to Snap Losing Streak After 2% Rate Hike Stems Selling
© Reuters
By Geoffrey Smith
Investing.com -- The forint strengthened on Thursday, after a massive emergency interest rate hike from the National Bank of Hungary (MNB) earlier in the day to shore up the faltering currency.
The MNB raised its key one-week deposit rate by 200 basis points to 9.75%, the highest in a decade, aiming to stop a weakening currency compounding an increasingly acute inflation problem. Core consumer prices rose over 12% in the year through May, while food prices were up 20% from a year earlier.
The forint had fallen over 5% in less a week against the euro - a currency with enough problems of its own - as Budapest's long-simmering dispute over the rule of law came to the boil again, tensions inflamed by the resistance of Prime Minister Viktor Orban to the bloc's attempts to punish Russia for its invasion of Ukraine.
An analysis commissioned by members of the European Parliament and published on Wednesday had recommended freezing all EU payments to Budapest, after years of a drift toward authoritarianism under Orban. The money is badly needed to fund Hungary's recovery from the pandemic, and to help it deal with the energy crisis currently engulfing almost all of Europe. The government's 10-year borrowing costs have more than doubled from 4% to 8.78% in the last eight months.
The forint had started to recover already late on Wednesday, after the MNB flagged Thursday's emergency meeting. By 09:25 AM ET (1325 GMT), it was at 404.59 to the euro, up 1.0% on the day and on course for its first winning day in six.
The MNB had made a similarly aggressive move with its base rate last week, but Thursday's move carries more weight because the bulk of bank refinancing in Hungary is tied to the one-week rate instead. It also goes further than analysts had expected. As recently as the start of this week, JPMorgan analysts were predicting that Hungarian key rates would peak at just 9.5% in the current quarter. They're now above that level, with the central bank still vowing to do more if needed to restore price stability.
Related Articles
Add Chart to Comment
Confirm Block
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.
Report this comment
I feel that this comment is:
Comment flagged
Thank You!
Your report has been sent to our moderators for review
Add a Comment
We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
Enrich the conversation, don’t trash it.
Stay focused and on track. Only post material that’s relevant to the topic being discussed.
Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.