13-year record: the Hungarian forint has strengthened significantly in just one day

The Hungarian forint just broke another record, and for the first time in a good while, a positive one. In terms of percentage change, the forint has not risen as much against the euro in a single day since 2 April 2009 as on Friday, according to Portfolio’s research. In terms of numbers, such a huge positive change has never happened with the Hungarian currency.

This turnaround required drastic interest rate hike announcements from the Hungarian National Bank (Magyar Nemzeti Bank, MNB), which partly aimed at unwinding speculative positions that played on the weakening forint and partly triggered the surge in strength, Portfolio reports.

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In order to counteract the depreciation pressure on the forint, the MNB raised the overnight covered lending rate from 15.5 percent to 25 percent, making it very expensive to take positions against the forint. The Bank also announced a one-day quick deposit rate of 18 percent. According to the results of this, banks have injected HUF 994.8 billion of liquidity and the MNB has promised to continue to do so daily as long as it succeeds in calming market sentiment, Portfolio writes.