The European currencies are facing a rough patch, with those outside the eurozone experiencing even more severe downturns.
Following a cautious strengthening over the past two weeks, the Hungarian forint commenced a significant weakening on Tuesday. The last instance when one had to pay 395 forints for a euro was on April 2. Since then, the exchange rate, though not soaring, had stabilized at the 389-390 level for an extended period. However, the forint has begun to weaken again, standing at 393 in the morning before falling further to a daily low of 395.4 so far.
This time, the weakening of the forint cannot be solely attributed to domestic factors, as almost every currency in our region is depreciating against the euro. In turn, the euro is weakening against the dollar, indicating that investors are favoring the dollar, with Central European currencies suffering even more in comparison.
In the morning, one dollar was trading for 370.1 forints, but by noon, it had fallen to 372.5, marking its weakest point since last October. Just a week ago, the exchange rate for the dollar stood at 358.
The primary reason for this shift is the higher-than-expected inflation in the United States, making it likely that the decrease in dollar interest rates may be postponed further. Meanwhile, the European Central Bank has hinted at a possible reduction in the euro interest rates soon, given the lower inflation rates in the region. Although the lower inflation in Europe is generally good news, investors are increasingly opting for the dollar due to its higher interest rates and the strong performance of the American economy.