Hungary's Central Bank Backs Forint Appreciation Amid High Inflation

Hungary's central bank has taken steps to support the appreciation of the forint, aiming to offset high services inflation relative to the euro area. The policy approach has been accompanied by a reduction in the central bank's inflation target to 2.5% from 2028 and $13.5 billion in foreign bond inflows.

The EUR/HUF pair remains pressured below key moving averages, with intraday indicators oversold. A range of Ft362.464 to Ft366.106 is expected for the next sessions, with a baseline outlook favoring sideways price action.

The central bank's strategy focuses on nominal foreign exchange gains as beneficial for disinflation rather than harmful to growth. This approach has led to a 6% appreciation of the forint against the euro this year, according to Indexbox.