The Hungarian forint has emerged as the worst performer among Central and Eastern European currencies this month, with EUR/HUF climbing back above 363, according to Société Générale. Markets are pricing in another 25 basis point rate cut by the Magyar Nemzeti Bank, which would bring the benchmark rate down to 5.75 percent.
The forint’s weakness reflects growing investor concerns about Hungary’s monetary policy trajectory as the MNB continues its easing cycle. This marks a notable divergence from some regional peers that have taken a more cautious approach to rate cuts amid persistent inflation pressures. The currency’s underperformance is putting additional pressure on Hungarian assets as traders reassess their CEE exposure heading into the MNB’s next policy decision.
The anticipated rate reduction comes as Hungary navigates challenging economic conditions, with currency depreciation potentially complicating the central bank’s inflation management efforts.
FXnCO Insight
Traders should monitor EUR/HUF volatility around the upcoming MNB meeting and consider reducing long forint positions until the rate-cutting cycle shows signs of stabilizing.
Source: FXStreet