After days of public reflection by the ministry on interest rates on loans, the Hungarian currency showed significant strength for the first time.

From an opening value of around 387.5 against the euro, the forint started the day strong on January 25: the Hungarian currency reached the 385 level with a boost. Then, after some weakness, the exchange rate returned to a range below 386.

A few days ago, the euro/forint exchange rate was still at the level of 382-383.

The forint fell after experts from the National Economy Ministry (NGM) published the report Portfolio.huIn their analytical article called “The Beginning of the Debate.” They discussed whether it would be justified to review the benchmark interest rates for floating rate loans. It has been specifically argued that low yields on Treasury bills should be used as a reference value rather than the Bank Interbank Offered Rate (BOBOR).

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According to the article, the change would be justified for corporate loans, but A file According to his information, the ministry is also considering expanding the scope of the change to include all loans (to also include housing loans). In addition, also for credit agreements already in progress.

The credit rating agency Standard & Poor's responded very quickly and very decisively to the ministry's opening speech to Reuters: Foreign investor sentiment (…) is only just beginning to recover after a series of populist measures targeting the financial sector, which the new proposal would undermine. Hungary's proposal on interest rates on corporate loans is the latest in a series of unconventional tools targeting the economy. According to a Standard & Poor's analyst, it poses a significant risk and could significantly reduce the profitability of local banks.