The growing problems of budget deficits are not an exclusivity among EU countries using the Euro, as several of its eastern nations, as in the case of Hungary, have a budget deficit much above the maximum tolerated by the European Central Bank, affecting the nation’s currency performance.
The Hungarian currency had its sharpest fall in a month after Dubai announced that it’s likely to delay debt payments, declining attractiveness for emergent markets less appealing currencies in Central and Eastern Europe.
After Chinese exports shrank at a slower pace according to a report posted today, the Hungarian forint found support in optimism regarding the global economic recovery to climb versus the euro, the U.S. dollar, and several other currencies.
The Hungarian currency declined together following most of Eastern European countries currencies, as a negative performance in Asian stock markets declined attractiveness for riskier assets, spurring demand for safety in dollar and yen priced assets.
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 currency posted significant gains today versus the euro and the dollar after a report in Germany indicated the highest rise in investors’ confidence in the wealthiest country in the European Union during the last three years.
The Hungarian forint, which suffered severe losses as its country plunged in one of the deepest recessions among the European Union member nations, reached a six-month high after the Hungarian tax system will change in order to stimulate the country’s agonizing economy.
Magyar Nemzeti Bank (Hungarian Central Bank) decided today during the Monetary Council’s meeting to hold the main refinancing interest rate at the same level – 7.50%, after the last cut made from 7.75% by MNB on September 25.
Hungarian central bank, Magyar Nemzeti Bank (MNB), will probably find it necessary to bring an end to the limits of the euro/forint rate maximum change (which is at 15% currently) after country’s inflation report for November showed 7.1% growth, while the target inflation rate is just 3.0%.
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