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Forint jumping up and down!

Forint jumping up and down!

Old Jul 14th 2022, 11:55 am
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Default Forint jumping up and down!

I've followed the value of the HUF compared to the € for a long time on XE - and it's become crazy!
Often early in the morning the € value is almost 10 HUF more than in the evening, 415 to 405.
And it can't be the rising of the € because it's value against the $ eg is so low -
https://www.xe.com/currencycharts/?f...to=HUF&view=1W
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Old Jul 15th 2022, 8:32 am
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Default Re: Forint jumping up and down!

I get daily emails from WISE informing me of the latest exchange rate.
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Old Jul 15th 2022, 1:21 pm
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Default Re: Forint jumping up and down!

Historically intraday movements of +/- 1% are fairly common, even "normal". The past 20 years or so have been relatively calm, even though GBP has been up and down between USD1.20 and USD2.05 during that time, but the merging of several major currencies into the euro combined with relative peace throughout the industrialized world, and steady economic growth led to unprecedentedly calm FX markets. Now Brexit, the covid pandemic and more obviously Russia invading Ukraine has created uncertainty and instability, and the currency markets have returned to their historic patterns of signficant volatility, which might look alarming if you're not aware that this was perfectly normal between 1980 (notably after Mrs Thatcher let GBP float in 1979, and most other industrialized countries followed suit) and 2000. This volatilty can be even more significant for smaller "emerging markets" currencies such as HUF.

What most people will never know, is that there can be relatively small FX transactions that can move the exchange rate, as the vast majority of FX transactions every day are between banks moving money back and forth during the day (intraday reversals) which generates necessary liquidity in the FX markets. So if a bank customer needs to move money in one direction, that can cause a noticeable movement in the rates. My employer needed to move about $600million in the mid 1990's, and convert it to GBP and my employer's bank advised that if they moved that much, which on the scale of international trade isn't a particularly large sum, in a single day it would likely move the USD/GBP exchange rate by about 0.75¢, and therefore could have reduced the amount of GBP received by as much as £3million. Therefore the advice was to split the exchange into smaller amounts spread over several days.

Last edited by Pulaski; Jul 15th 2022 at 1:27 pm.
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Old Jul 15th 2022, 4:00 pm
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Default Re: Forint jumping up and down!

Pulaski, thanks for the explanation. So it really matters whether I get 404 or 412 HUF for your € ...
A bit OT:
I still remember when I was in Canterbury in the 60s for an English course and the pound was worth more than 9 Deutsche Mark!
And later of course it was Soros who realized that the pound was still overvalued.
My sister who lives near London with her English husband has all her money on a Swiss account (she worked there many years ago) and part of his money is in a trust in Guernsey ...
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