After losing 7.5% versus the US Dollar in the previous week, the Hungarian Forint is on the back foot again as the new week kicks off. Risk aversion across financial markets is driving flows out of riskier assets such as the Forint.
At 09:30 UTC USD/HUF is trading up 0.3% at 328.64, approximately the middle of the daily range of 324.95 – 331.93.
Risk Off Dents Demand For Hungarian Forint
Risk sentiment has taken another hit as the new week begins. The number of new cases and deaths from coronavirus escalated over the weekend. In response, governments across the globe are implementing stricter measures to curb the spread of coronavirus. More and more countries are going into lock down. These very measures are overwhelming the moves taken by central banks to cushion the blow to their economies from coronavirus.
Last week the Hungarian Finance Minister Milhay Varga said that the economy will recover from the coronavirus pandemic only at a very slow rate. His comments came as the brutal economic impact of coronavirus was already being felt. Tourism is non-existent, the automobile industry, strategically the most important sector for the economy is at a standstill and the hospitality sector is in ruins. The government expects unemployment to jump to the hundreds of thousands. However, should the current situation persist for a prolonged period, unemployment could easily be in the millions.
Congress Fails To Agree Funding Package
The US Dollar pushed higher versus the Hungarian Forint, although it traded lower versus its major peers after the US Senate failed to agree on a massive funding package to combat the impact of coronavirus. The Senate procedural vote on Sunday evening tallied 47 – 47, failing to secure the 60 votes necessary to push the $1 trillion aid package through.
The stalemate in the Senate came after the Democrats warned that the bill was not to their liking. Despite the failure, President Trump expressed optimism that the lawmakers would reach a deal sooner rather than later. Hospitals, workers, companies and states have all warned that they need more resources. Pressure is mounting for Senate to agree a deal. Investors will remain glued on developments in Washington today.
