The relentless underperformance of the Hungarian forint in recent days will put additional pressure on Hungary’s National Bank (MNB) when it holds its monetary policy meeting today. Economists at Commerzbank expect the HUF to weaken if MNB hikes by only 50 basis points (bps).

Pressure on MNB

“HUF weakness has triggered some revision of expectations amongst market observers recently. A sizeable minority has switched to expecting a 100 bps hike instead. This means that, if MNB were to simply ignore such expectations and hike by 50 bps, there could be immediate further pressure on HUF.”

“It will be interesting to watch today whether or not MNB sees more urgency in the situation, in view of no natural peaking in inflation yet. The HUF’s near-term trajectory will depend very much on the answer.”