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HUF on roller coaster

Hungarian forint has been depreciated against all currancy. Where is the end of the story?

30 October 2011 (updated on 2 November)

HUF on roller coaster

The weakness of HUF was manifested in the last few weeks.

Hungary at risk because of eurozone debt crisis while national debt has been decreasing thanks to government commitment. The price of decreasing debt makes Hungary weaker, however. Business sector, for instance, were punished by sectorial taxes. Banks, insurance and fiancial comopanies particulary are concerned with political startegis driven by the government. Taxes removed capital from the economy and corporate sector which helped budget deficit maintained in 2010 and 2011. What happens in 2012?

Weak HUF shows a real and rational risk of the political strategy which prefers short term interest to long term solutions. Hibarnated financial sector will not stimulate the economy. Liqudity is a real issue in Hungary. All counries ,where liquidty is a hot issue, are under pressure. Economic growth and budget deficit and financing of Hungary are all question marks in the next year. But this is how the financial markets refer to the troubled country in EU.

Recession fears

The worst scenario brings recession for Hungary in the next year. Slow down in economy will affect on tax revenues and financial status of Hungary. The question is How? Pessimistic approach is clear and understandable and well represented in Hungarian forint value. Uncertainty and lack of trust can kill both optimistic and realistic expectations. Leader politicians communicate it as a pressure from abroad because their local economic strategy against international interests. Honestly, the lack of strategy is the real problem!

When ends the story?

HUF on roller coasterHUF price will remain volatile for the remainder of this year and likely well into next year. That trend will continue so long as the fear of recession remains tied to financial markets, which themselves are being roiled by continued bad economic news out of Europe - most damaging being the threat of a default by the government of Greece on that country's monumental debt load.

Eurozone debt crisis promises never-ending head ache to Hungary.