The Hungarian Forint continues to decline versus the US Dollar on Tuesday. After shedding 1.7% on Monday, the Forint was trading a further 2% lower on Tuesday at 314.11. Risk sentiment continues to drive investors away from perceived riskier currencies such as the Hungarian Forint and towards safe haven US Dollar.
Forint Drops On Risk Aversion & NBH Action
The Hungarian Forint is trending southwards as coronavirus fears escalate. Europe is now the epicentre for the outbreak. With some counties in Europe going into full or partial lock down the hit to eurozone growth is expected to be significant. Given that Europe is one of Hungary’s main trading partners, this has negative consequences for Hungary and the Hungarian economy.
The National Bank of Hungary announced a series of steps to help the economy deal with the effects of coronavirus. The central bank accepted bids worth €748 million from commercial banks for its swaps, this was well in excess of the €308 million on offer. The moves provide liquidity for the forint amid ongoing coronavirus uncertainty.
There is no Hungarian economic data due to be released. Investors will remain focused on coronavirus developments.
US Dollar Rises As Focus Turns To Stimulus
The dollar closed Monday higher versus the Hungarian Forint despite the Federal Reserve slashing interest rates by 100 basis points on Sunday evening and announcing a $700 billion bond buying programme to shield the US economy from the oncoming coronavirus hit. The move failed to calm investors who sold out of US equities. The US stock market plunged by 12.9%, the worst one day fall in 3 decades.
A much more sombre tone from President Trump has sent investors in search of safer havens such as the US dollar. Democrats have proposed a US$750 billion stimulus package similar to the scale of the then-President Obama package following the financial crisis.
Investors will now look ahead to retail sales data due to be released. Analysts are expecting retail sales to have increased by 0.2% in February, down from 0.3% increase the previous month. However, given that this data was from before the coronavirus outbreak really hit the US investors could consider it to be out of date.
