US Dollar / Hungarian Forint - USD/HUF

While Hungary joined the European in 2004, the Hungarian forint (HUF) is still the national currency in the Democratic Republic of Hungary despite the Hungarian monetary authorities’ efforts to conform to the Maastricht convergence criterion: the Hungarian public deficit is very superior to the 3% of the GDP defined by Maastricht; and the situation got worse (so as the countries already members of the euro area, including France) in the context of the financial crisis of 2007-2008.

In terms of parity of currencies, the Hungarian central bank tried until February 2008 to maintain its currency into a +/- 15% fluctuation band according to the euro (convergence criterion of the ERM II- Exchange Rate Mechanism II, Hungary couldn’t join until now because of other criterion); this convergence effort had an influence (and still has) on the fluctuations of the USD/HUF cross.

So we have observed since 2004 a similarity between the fluctuations of the USD/HUF and EUR/HUF crosses.

The USD/HUF cross had an exchange value USD/HUF= 190 by the end of 2004, a momentary appreciation of the Hungarian forint (USD/HUF = 180 in March 2005) was followed by a new depreciation (so a bullish trend of the cross) until March 2006 (USD/HUF = 220); then there was a 2-year appreciation (parallel to the appreciation of the forint against the euro, amplified by the appreciation of the euro against the dollar) led the USD/HUF cross to a lower point USD/HUF= 147 in July 2008 (-33% in 2 years, or if you prefer +33% for the HUF against the dollar).

A new re-appreciation (in terms of speed) of the dollar against the forint happened during the world stock-exchange and financial crisis, and we registered the exchange value USD/HUF= 217 in December 2008; a re-appreciation which first took a break (following the example of the movements of the euro against the same dollar) in January 2009 (USD/HUF= 200) and persisted until March 2009 at USD/HUF= 245.

In 6 months, the Hungarian currency decreased by 67% against the USD.

Following the combined fluctuations of the UERHUF and EUR/USD cross, the USDHUF cross decreased by 25% in few months (whereas the EUR/HUF cross only decreased by 15% on the same period, that shows that the increase of the EUR/USD –that is to say the decrease of the USD/EUR- accentuated the bearish movement of the USD/HUF); and we had the exchange value USD/HUF= 181.00 by mid-November 2009.