Economy Forex News

USD/HUF hits 18-month highs above 322.00

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  • The Forint was oscillating in response to the Hungarian central bank’s latest rate decision.
  • USD/HUF reached 18-month highs above 322.00, but has since fallen back towards 320.00.

The Hungarian forint has experienced oscillating conditions in recent trading, with USD/HUF at one point surpassing previous weekly highs at 322.00 to touch fresh 18-month highs. Before returning to 320.00.

The Hungarian central bank (Magyar Nemzeti Bank or MNB) stated at 13:00 GMT that it had chosen to raise its prime rate by 30 basis points to 2.1 percent, as predicted. Signaling a continuation of monetary tightening. As expected, the overnight deposit rate was also lifted by 30 basis points to 1.15 percent.

USD/HUF

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The bank decided to lower the pace of rate hikes from 30 basis points each meeting to 15 basis points per meeting in September. With another 15 basis point boost in October. The forint was not pleased with the move to halt the pace of rate hikes. Also the USD/HUF is now about 4% higher than its September lows near 308.00.

Despite the MNB’s decision to speed up rate hikes once more, the initial reaction of USD/HUF was a sharp rise above 322.00 from approximately 320.50. Implying that some traders were anticipating a larger rate hike.

Some may have been betting/hoping that the Hungarian central bank will follow the Polish and Czech central banks’ lead . And undertake a much larger-than-expected rate hike. In November, the Polish central bank boosted interest rates by 75 basis points, while the Czech National Bank increased rates by 1.25 percent.

USD/HUF was able to pull back downwards

USD/HUF was able to retreat lower, however, following the press conference following the MNB policy meeting, which started at 14:00GMT. The bank promised to keep the tightening cycle going as planned. Additionally hinted that it would hike its one-week deposit rate above prime.

The Hungarian central bank also stated that tightening will continue until the inflation outlook improved. However added that the risks of inflation being high for longer have grown. In addition, the bank announced that its foreign exchange operation would no longer provide HUF liquidity.

The Hungarian central bank anticipates inflation to exceed 7.0 percent in November. After October’s consumer price inflation surprised to the upside at 6.5 percent. Analysts think that the MNB is nimble, and that if rising inflation persists. The bank could speed up rate hikes once more. It remains to be seen whether this will be enough to turn the tide for USD/HUF, which is now up approximately 7.5 percent for the year.

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Michelle D. Madsen

Michelle D. Madsen graduated from the University of Westminster and has been deeply involved in the world of finance ever since. She has worked as a Broadcast Journalist hosting various news shows and informative webcasts about the financial markets. Since 2004 she has also been writing for Metanews daily, her attention to detail, and her in-depth knowledge of the financial markets have led her to cover Foreign Exchange and commodities. The world of finance has changed in the last few years with the introduction and rising popularity of cryptocurrencies. She has in no means been left behind, adding this to her bank of intellect and is now also an expert in cryptocurrencies. For the last ten years, Ms. Madsen has been engaged in the financial market. She has notedly written a great number of incredibly informative reviews for the crypto exchange and forex brokers. Her wealth of knowledge has enabled her to become a leading expert in the field. She continues to inform the public writing up-to-date, thorough reviews for the readers of Metanews as she has for the last decade.
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