What is EUR/HUF?
The EUR/HUF currency pair represents the exchange rate between the euro and the Hungarian forint, or the number of forints (the quote currency) needed to purchase one euro (the base currency). The "exotic" currency pair is susceptible to volatility and can provide opportunities for traders seeking to diversify their forex portfolio.
The Hungarian forint is the country's official currency; it was established in 1946 and is issued by the National Bank of Hungary (Magyar Nemzeti Bank). Despite joining the European Union (EU) in 2004, Hungary is one of the EU member states that has not adopted the euro as its official currency, fearing the shortcomings of the euro revealed by the 2008 financial crisis, such as the inability to set an independent monetary policy to promote economic recovery. Its acceptance of USD 25 billion in aid from the International Monetary Fund (IMF), the European Union, and the World Bank pushed back an already-delayed adoption plan and reduced public support.
The euro is the official currency of the Eurozone, which comprises 19 of the 27 member states of the European Union. It was introduced digitally in 1999 and became physical in 2002. It serves as an international reserve currency and medium of exchange under the supervision of the European Central Bank (ECB).
What affects the price of the EUR/HUF pair?
Negotiations regarding the adoption of the euro by Hungary or news related to the debt crisis in the Eurozone can have a significant impact on the EURHUF exchange rate. In addition to political events and geopolitical crises, the Eurozone's economic performance is a significant factor in determining euro pricing. Elections, policy adjustments, Brexit-related developments, tensions between EU member states, and concerns about the Eurozone's future are all potential factors that could impact euro market sentiment.
The trade balance between the two regions is an additional factor affecting the relative value of the currencies. By a wide margin, the European Union, and particularly Germany, is Hungary's largest trading partner. A trade surplus in one region can cause the currency to appreciate, whereas a trade deficit can cause the currency to depreciate. Hungary has a skilled labour force and an export-driven economy, with automobiles and automobile parts and accessories, electric batteries, video displays, and packaged medicines constituting its primary exports.
The EUR/HUF exchange rate is also influenced by how central banks use interest rate policies to manage their respective economies. For instance, if the European Central Bank (ECB) determines to lower interest rates, the euro's value against the Hungarian forint may decrease. Similarly, if the National Bank of Hungary (MNB) increases interest rates, the forint will strengthen, and the EUR/HUF pair will decline.
What to watch out for when trading EUR/HUF?
When trading EURHUF, keep an eye on data releases and statements from influential organisations in Hungary, the Eurozone, the European Union, and individual member countries (primarily Germany and France, Europe's two largest economies).
- National Bank of Hungary and the European Central Bank (ECB) for interest rate and policy decisions
- Hungarian Central Statistical Office and Eurostat for data on Trade Balance, wages, Unemployment Rate, Consumer Price Index (CPI), and Gross Domestic Product (GDP)
- EU Average Hourly Labour Costs
- Eurozone Manufacturing and services PMI
- Eurozone Consumer Sentiment
- Economic data for major eurozone countries (Germany, France, Italy, and Spain)