“Hungary’s Economy Ministry singled out RGE’s recommendation to sell forint on rallies as the main reason for its recent plunge against the euro. However, we see the recent statement by Economy Minister György Matolcsy that the policy of a strong forint between 2002 and 2010 was a mistake as the main reason for the forint’s slide,” RGE economist Jelena Vukotic said in a note.
In an article published in weekly Heti Valasz on Thursday, Mr Matolcsy faulted the exchange rate policy that propped up the forint in 2002-2010. The forint weakened from around 293 to the euro on Thursday past 297 on Friday.
Vukotic said in her note that the weakening was “not very large in a Hungarian context”, adding that unorthodox government policy moves had triggered even sharper selloffs in the past.
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