The HUF weakened as a result of the Republican victory, as analysts predicted. Donald Trump’s protectionist policy would not be good for trading partners, the European indices also turned upside down as a result of his victory. The forint weakened to 412 forints 30 fils against the euro yesterday.
The dollar also strengthened against the euro on the news of Trump’s victory, as the market expects an economic policy from the Republican president that could result in a stronger dollar. The increase in customs duties and spending means a higher inflation trajectory, which also means a higher interest trajectory, and this has already been priced in.
Investors put the forint badly against the dollar yesterday, the quotation weakened to the level of 385. There is some correction in this today, 380 forints cost 80 fils to one dollar, so far today the forint has strengthened by 0.3% against the American currency.
Today’s most important event will be the Fed’s interest rate decision.
The US central bank is expected to reduce the key interest rate by 25 basis points, but the really important question will be what message it sends for the future. Trump’s policy is expected to mean a higher inflationary environment, the question is whether the Fed will react to this, because political events themselves are not usually commented on. A strong message can also tip the forint, but if President Jerome Powell just says that the presidential election has no effect on interest rate policy, it can give strength to the forint.
The cover image is an illustration. Cover image source: Getty Images
Source: www.portfolio.hu
