No stopping: Hungarian forint at a several-month high

The Hungarian forint continues its impressive ascent, hitting multi-month highs against both the euro and the dollar. This surge is particularly noteworthy against the American currency.

On 24 May, the forint held onto its remarkable gains, showing no signs of losing steam. The day began with the forint trading at 386.3 to the euro and 357.32 to the dollar. By just after 8 PM, it had strengthened to 383.95 against the euro and 353.72 against the dollar, marking gains of 0.63% and 0.99% respectively, Világgazdaság reports.

What’s the reason behind the strengthening?

The exact catalyst for the forint’s dramatic rise is unclear, given the absence of significant macroeconomic data from either Hungary or the US on Friday. However, it appears that even minor economic indicators were enough to fuel substantial market movements.

Notably, the forint wasn’t the only currency making waves. The euro also posted a 0.4% gain against the dollar. One possible factor behind the forint’s strength is Friday’s report from Hungary’s Central Statistical Office (KSH), revealing a lower-than-expected unemployment rate of 4.4% in April. According to our article published on Friday, in absolute terms, there were 217,300 unemployed in April (which was still 100 more than in March and 27,200 more than twelve months earlier).

This lower rate suggests underlying strength in the economy, which could temper expectations for the Hungarian National Bank’s (MNB) planned rate cuts this summer. An overheating economy risks inflation, something the central bank will likely strive to prevent, according to Világgazdaság.