The forint is starting this week under pressure falling from the highest level in almost 10 days before the Hungarian central bank meeting today, which is likely to slash the national benchmark interest rate to a record low for the country since the end of the socialist era.
The Hungarian central bank will publish its decision regarding the current interest rate levels today at noon, GMT time, and according to most economists the Central European nation is likely to cut the rates to a record low of 8 percent from the present 8.5 percent, the highest in the European Union together with its neighboring country, Romania. The speculations regarding the interest rates are forcing the forint down as it can be understood that current government efforts to stimulate the economy are not being sufficient to revive Hungary from its worst recession in 18 years, as unemployment doubled since last year, and the IMF bailout was not enough to revive growth in the nation.
Analysts indicate that even if speculations are suggesting a 0.5 percent slash for the national interest rates in Hungary, the central bank may once again surprise economists as the previous time and go for a full 1 percent cut, which would be definitely worse for the forint’s performance.
EUR/HUF traded at 268.70 as of 10:21 GMT from an opening rate today in Budapest of 268.50. USD/HUF followed the same trend climbing slightly to 187.68.
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