(Bloomberg) -- Hungary’s central bank pledged to maintain “disciplined and tight” monetary policy to soothe investor concerns as the forint fell to the weakest in 1.5 years.
The National Bank of Hungary on Wednesday announced green programs from January, including easing rules relating to green loans for households and providing green bonds for companies. It followed up with additional comments noting that the plan “won’t influence the direction of monetary policy.”
The scope of the green program “will be limited and targeted, with strong environmental sustainability conditions,” the central bank said. It also noted that overall interbank liquidity would tighten next year due to the expiration of previous collateral repurchase agreements with lenders that were initiated during the Covid crisis.
Stuttering Recovery
The forint fell 0.7% in a sixth day of declines to 400.7 against the euro, the weakest since March 2023. Demand for riskier assets has fallen as Israel vowed retaliation to missile attacks by Iran. US employment data exceeding estimates further boosted the dollar against other currencies.
The forint has underperformed central European regional peers on mounting concerns about Hungary’s budget policy in the run-up to the 2026 general elections. Prime Minister Viktor Orban’s government has been pressuring the central bank to do more to kickstart a stuttering economic recovery.
BofA Securities became the latest this week to forecast further forint underperformance, joining recent calls by Citigroup, Morgan Stanley and Barclays.
The final decision about the launch and composition of the green program will be made by the Monetary Council and will hinge on inflation and financial-market conditions, according to the statement.
(Updates with central bank clarification about green home program in second paragraph.)
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