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Investing.com - The Hungarian forint remained largely unchanged against the euro following the National Bank of Hungary’s (NBH) decision to maintain its key interest rate at 6.50% during its meeting on Tuesday.
The central bank kept its hawkish tone while simultaneously announcing a reduction in the required reserve ratio from 10% to 8%, a move that economists at ING note will only offset expiring liquidity from previous facilities rather than change overall market liquidity conditions.
Market participants interpreted the reserve requirement adjustment as slightly dovish, despite the unchanged interest rate stance, as it suggests the central bank is taking steps to prevent further monetary tightening in the Hungarian economy.
The EUR/HUF currency pair showed minimal movement following the announcement, contrasting with greater volatility seen across other Central and Eastern European currencies on Tuesday, with rates closing just 1-2 basis points higher after experiencing more upward pressure before the meeting.
ING analysts maintain a neutral outlook on the Hungarian forint since early July, suggesting the currency lacks momentum to test lower levels despite attractive carry opportunities, and projecting the EUR/HUF will likely remain within the 399-400 range in the coming days.
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