Hungarian Forint reaches six month high

07-01-2009 15:12

The national Hungarian currency climbed to the highest level in six months due to the change in its tax system which should fuel Hungary’s struggling economy that is facing one of the worst slumps among the European Union countries. The Hungarian Forint reached a six-month high versus January 8, as a result of the approved tax reductions in order to boost the Hungarian economy. The tax cuts should also stimulate demand for the Forint, which went up by more than 1% versus the Single Currency and proved to be the most successful European currency today.

Very attractive rebound

The BUX, an equity index of large companies traded on the Budapest Stock Exchange, increased 44% in the last three months, proving an extremely attractive pattern for Hungarian equities, which suffered heavily from the worldwide recession. Hungary has been castigated even harder due to the emergency loan from the IMF in 2008 to prevent the Hungarian system to crash completely.

Right road to recovery

Tax reductions are being considered as a very effective mean to boost the economy without major indirect consequences and therefore, analysts are quite optimistic concerning the Hungarian reformations voting of yesterday. Hungary meets the IMF criterions and shows signs of an improving economy, which has a positive effect on the attractiveness of its national currency.