Orban's statements against Ukraine, EU send local currency to record low

Bloomberg reported that on Tuesday the forint fell 0.9% to 377.28 against the euro, the worst daily performance among emerging market currencies.

Later on Tuesday, the Hungarian central bank is expected to decide on the first interest rate cut of the year.

The central bank intends to cut its key overnight interest rate by one percentage point to 17%, in line with analysts' estimates and market expectations. The central bank said it views the move as the beginning of a series of cuts in official borrowing costs.

For most of 2023, Hungary's key policy rate of 18% attracted investors, which helped the forint rise 6% against the euro YTD, second only to the Mexican, Colombian, and Chilean pesos among emerging markets.

“A cut in the overnight rate will make the forint more sensitive to negative news related to both internal and external factors,” a senior currency analyst at In Touch Capital Markets said. 

“Hungary may have to wait longer for the European Commission to unblock EU funds after the country announced that it would block the next tranche of financial support for Ukraine,” he added.

• Orbán compared the EU to Hitler's plans. The Czech Republic said that “no one is forcing Hungary to be a member of this community.”

• Orbán also said that Ukraine is not capable of defeating Russia. Kuleba responded.