Hungary’s central bank has stated it will intervene to safeguard the stability of the domestic financial markets if required, after the currency and stock market plummeted.
As the Ukraine crisis continues, the consequent global financial tensions shook Central European markets as investors sold emerging-market assets.
The Hungarian National Bank (MNB) has been criticising the government’s pre-election stance, which has been driving up inflation and the budget deficit. Reports indicate the emerging market turbulence could result in Hungary being penalised by international investors due to its weakening macro-economic fundamentals.
The Forint plummeted to a record low on Tuesday, moving past 379 to the Euro on the day from 371 the day before. The currency lost 6% of its value over the past five trading days. In addition, the Dollar/Forint rate also hit a record 340, an 8.1% rise since the Covid crisis.
The Hungarian National Bank is keeping a close eye on the situation and said it is prepared to intervene at any moment. It went on to add that financial trends throughout the region are currently being influenced by external factors, as a consequence of Russia’s invasion of Ukraine.
Moreover, according to data relating to Hungary’s recovery from the pandemic, the economic fundamentals are strong. The central bank stated: "The clear goal of the MNB is to ensure that the increased risks due to the geopolitical circumstances will not jeopardise Hungary's price and financial stability. Money market movements are not justified by fundamentals, but they increase upside inflation risks," the MNB said.
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