Hungary’s “fairytale economy” – as former economy minister György Matolcsy famously described it last year to CNN – remains, well, exactly that – fairytale. Despite the emphasis by government spin-doctors on lower bond yields and the strengthening forint, life for your average Imre and Ildikó just doesn’t seem to be getting any easier – as the latest figures for consumer spending show. Continue reading »
It’s getting rather routine: another rate setting meeting at the Hungarian central bank, another rate cut of 25 basis points down to another record low rate. On Tuesday this pattern took the rate down for the ninth consecutive month to 4.75 per cent.
About the only upset in this otherwise well-rehearsed show was was a mistakenly sent alert on Bloomberg terminals that the rate had been reduced to a mere 1 per cent. Cue a flurry sell off in the forint, before the damage could be repaired (see chart) – and business was back to normal, with the Hungarian currency trading at Ft 299.48 to the euro at 5pm Europe time. Continue reading »
Hungary is doing just fine for now, at least that’s the thrust of the news from the government’s PR office. Of late, it seems Viktor Orbán, the adrenalin-high prime minister, has been cutting ribbons for a living; a railway rolling stock builder expanding here (Stadler – a Swiss producer, in Szolnok, with €13.6m in further investment) – a children’s toy company there (Lego – the Danish plastic brick maker, in Nyíregyháza, with a whacking €200m investment job) were headline stories last week. Continue reading »
The devil being in the detail is a phrase with much resonance in Hungary – especially when, as on Thursday, things look rather too good.
“Inflation at record low” said the headlines. Indeed, annual consumer price inflation fell to 2.2 per cent in March, well below the consensus of 2.5 per cent and the lowest ever recorded since the transition to a market economy. Continue reading »
Julia Király, deputy-governor of the Hungarian central bank (pictured left), resigned on Monday saying that moves made by György Matolcsy, the newly appointed governor, were damaging both the bank’s hard-earned credibility and the national economy over the longer term.
Last week Matolcsy announced a new central bank funding scheme which aims to get cheaper lending to small businesses and also reduce their exposure to euro-denominated loans. Continue reading »
The Hungarian currency is a bit like the famed “Grand old Duke of York” of late – the Duke who according to the traditional nursery rhyme, marched his 10,000 men up the hill, then back down again, all to no avail.
The new “postmodern” monetary policy unveiled on Thursday was widely – and worriedly – anticipated, but there was something of a relief rally afterwards. Where we go from here? It’s anyone’s guess. Continue reading »
By Peter Attard Montalto of Nomura
The Hungarian central bank has on Thursday embarked on a risky strategy of postmodern policy in a bid to boost growth through lending via the provision of liquidity. It is labelled as a “Funding for Growth Scheme”.
So will it work? And longer term, what does it mean for the forint? Continue reading »
Hungary’s new central bank president Gyorgy Matolcsy has unveiled a new 250bn forint (€831m) lending plan which allows banks to borrow at zero per cent from the central bank.
The banks can then lend to businesses with the funds at a maximum 2 per cent rate of interest, a measure aimed at getting loans to small and medium-sized businesses to help them replace their foreign currency loans with forint loans. The forint initially depreciated on Thursday, to around 303.8 to the euro, before reversing to around 300.6 to the euro at 1pm CET, an appreciation of 0.6 per cent. Continue reading »
András Simor, the hawkish former governor of Hungary’s central bank who stepped down this month, has quickly found a new perch.
The European Bank for Reconstruction and Development announced on Wednesday that Simor would take a top job as vice president for policy, starting July 1. Based in London, he will be a comfortable distance from Budapest and his arch-critic prime minister Viktor Orbán, whose close ally, György Matolcsy, has been installed in Simor’s office at the central bank. Continue reading »
Hungary’s central bank on Tuesday cut its benchmark rate by 25 basis points to a record low of 5 per cent, in the first decision overseen by György Matolcsy, the dovish new governor who took charge earlier this month.
The move was in line with expectations, though the forint strengthened slightly in relief that Matolcsy had not gone for a bigger reduction. Just after the announcement the HUF was 0.4 per cent up against the euro at 304.7. Continue reading »
It’s easy to see the Hungarian forint’s recent bout of weakness as a reaction to the latest round of controversial policy moves by the maverick prime minister Viktor Orbán.
And so it is. But, as chart of the week shows, the HUF has been a laggard among east European currencies since before Hungary and other east European states joined the European Union in 2004. This is long-term underperformance, with long-term causes. Continue reading »
The Hungarian forint plunged on Tuesday to its lowest level against the euro since last June, losing over 1 per cent to 305 forint as investors took fright at the latest round of controversial policy moves from prime minister Viktor Orbán.
They don’t like the row between Budapest and the European Union over the constitution; nor György Matolcsy, the new central bank governor; nor plans to convert small companies’ fx loans into forint, using the central bank’s reserves. Expect further pressure on the currency. Continue reading »
After all the hot air surrounding the appointment of the Orbán-loyalist György Matolcsy as central bank governor, here’s a dash of cold water - a 4.1 per cent plunge in seasonally-adjusted retail sales in January, bigger even than the 3.7 per cent forecast.
That’s nine months in a row of decline and a stark reminder of the dire state of the economy, as it struggles with stagnation, heavy foreign currency denominated debt and investor concerns about prime minister Viktor Orbán’s unpredictable economic policies. Continue reading »
György Matolcsy, Hungary’s new central bank governor-designate, may have earned a reputation for innovation and unorthodoxy when minister of economy. But he insists he will be a veritable pillar of conservatism and reliability in his new job – and that’s what he told a parliamentary nomination hearing on Friday.
However, the 100m-forint question is, is this for real, or just a charade to calm the markets? Continue reading »
That bumping sound you hear may be the echo of Poland’s economy hitting bottom with new data showing the the economy grew by just 1.1 per cent in the final quarter of the year.
But disappointing though that is for a country that has boasted of its ability to ride the post-2007 global crisis, it was slightly more than the consensus forecast of 0.9 per cent. And new purchasing managers index numbers from central Europe released on Friday also suggest the region is doing a bit better than before, thanks largely to a pick-up in Germany, the biggest export market. Continue reading »