Regrettable: the forint has held up so far, the low point is here in November

The euro-forint cross rate rose above the level of 409 on Tuesday morning, setting a new November record at the same time.

They arrived in the morning September foreign trade datathe surplus of goods turnover was 1.2 billion euros (487 billion forints), but this was not the only cause of the spectacular jump in the forint exchange rate.

Although the detailed data can be interpreted more negatively: exports accounted for only 95 percent of September 2023, and imports for 96 percent (calculated in euros), i.e. the latest data only confirmed what last week’s GDP data pointed out, there is no economic growth, therefore the actors of the economy import less, on the other hand, due to the decrease in production, the export volume is also lower than last year. In addition, the fourth quarter may not turn out well either, at least the manufacturing industry BMI data (for the month of October) received on Monday indicate this.

What would happen here if the shorts really turned on him?

According to the data of the Magyar Nemzeti Bank, the short stock of foreign investors speculating on the weakening of the forint is far from peaking, although the data is delayed, it appears that the amount of open short positions did not even reach HUF 50 billion in mid-October. At the end of September, the stock of positions against the forint was three times that amount.

The forint’s performance on Tuesday is also disappointing in light of the fact that the euro has been strengthening against the dollar since morning, and such a combination is generally supportive for emerging market currencies.

The big question is, of course, how the American presidential election will turn out. “The euro would not benefit from an increase in Trump’s chances, as the expected protectionist measures would further worsen the already weak growth prospects of the region. Because of this, even the ECB may be forced to cut interest rates faster,” Erste wrote in its note on Tuesday.

Compared to the beginning of the year, the forint depreciated by 6.4 percent against the euro and by 8 percent against the dollar.