The forint, Hungary’s national currency, hit a record low against the euro on August 29, falling to 331.9. The currency also hit 300 against the US dollar, marking a two and a half year low.
On August 30, the currency slowly started to recover and seemed to have stopped losing value, currently standing at 330,7 against the EU’s currency.
Hungarian economic news portal Portfolio claimed that external market difficulties and the extremely loose nature of Hungarian monetary policy were the main contributors to the fall of the national currency.
Gábor Regős, an analyst at the Századvég Economic Research Institute pointed out that the depreciation was supported by the latest decision of the National Bank of Hungary (NBH) not to introduce any further restriction in its monetary policy.
On August 27, the monetary council of the NBH decided to keep interest rates at 0.9 per cent.
“With respect to the fact that the NBH does not have a currency target, it leaves a free path for the fall of the forint. It would be hard to imagine that the central bank would intervene,” Péter Virocácz, an analyst of ING Bank told the Hungarian press.