Nineteen members of the EU use the Euro as their currency. Traders choose it because the process of predicting is simple, and the money demonstrates a very high level of marketability. The chief impacting factors aren’t connected with the policy or economic features like the position of the Central Bank of Europe regarding the discount rates.
It happens as long as the EU economy demonstrates impressive results at the expense of such advanced countries as France and Germany. Meanwhile, such countries like Greece can suddenly sign amendments, which will lead to changes in the Euro.
However, the deviations mentioned stabilize and don’t cause issues for the Euro. Therefore, the currency is characterized by low variability, which remains a good point for traders.
HUF or Hungarian forint is the official currency of Hungary. The name of it, which is somewhat curious, originates from Florence, the city of Italy. In the 12th century, the coins issues there moved to Hungary and ingrained.
However, the time of gold and silver is over, and the post-Soviet governments had to fight the crisis which took place after Yugoslavia and the USSR collapsed. Hungary decided this issue via the mass emission of funds.
Therefore, the rising prices in the 80s of the 20th century accounted for 35-40% per year. Afterward, the exchange rate was rather high when the Euro was just introduced. Then the pair acquired practically zero liquidity.
In 2010, young and advanced politicians started to rule the country. Their activity was productive, and they managed to enhance the leading indicators of the country by four-six times.
The revenue of foreign investment represented the best achievement. In 2018, Hungary could boast the incoming funds, which accounted for 73 billion dollars.
As we can guess, traders started to get interested in the EUR/HUF pair just not a long time ago. The situation of the unstable market makes dealing with this instrument rather profitable.
To analyze changes in the Euro, you should consider the relevant economic indicators in Europe. First, we mean the Consumer Price Index. It demonstrates the possible changes.
The rise if the index is impacted by factors like fall of household incomes, a rising rate of unemployment, and the breaking of set trade relationships. Therefore, citizens possess fewer finances, and producers and sellers try to compensate money by increasing the cost of products.
Most European countries won’t probably face this, but anyway, it can happen. It is more relevant for the countries to make a big step to be called the developed ones. First, we mean Hungary.
That’s the number one factor in the correlation of the EUR/HUF. It demonstrates that issues inside Hungary won’t have an impact on the Euro. If everything is that bad that it will affect CPI results, a fall in the strength of the Euro will lead to the forint drop.
Besides, the relationship will be indirect, but high meanings will characterize the marginality and variability. However, such changes have to deal with the releases of economic news and don’t occur too often.
Another significant point is connected with salary and employment rates. In Hungary, the wages are lower than in Europe. That’s why the locals seek jobs in more advanced countries.
Even though it’s not an evident source of impact on the HUF strength, it plays its role. The outflow of the locals decreases the production sphere of the economy. The exports and GDP get lower. The forint, therefore, becomes less valuable.
This is temporary as long as people work seasonally. However, these migrations provoke high exchange rate changes to feature of the EUR/HUF.