Last week, after Friday’s working hours, Standard & Poor’s issued a reduction of the perspective on the sovereign debt of stable to negative. S&P already qualifies the issuer with ‘BBB-/A-3’, the lowest within the investment grade, which highlights the importance of a negative perspective from here. The reason and the emphasis of the analysis seemed to focus on government expenditure prior to elections and fiscal deficit (the elections are in 2026) – S&P cited the persistent fiscal deviation and almost 75% of the public debt in relation to GDP as the main reasons for a negative perspective, says CommerzBank’s currency analyst, Tatha Ghose.
EUR/HUF shoots above 410 after the reduction, fears on the CPI
“In our opinion, however, given the multiple challenges that the EU will probably face as a result of the altered vision of the US about world trade and international relations, most EU countries could materially exceed their fiscal expense plans in the coming years. This will be part of a broader impulse, including in defense, which will be ‘planned’ or recommended, not a deviation. The latest in the minds of most EU governments.
“But, none of this is central to our approach here. Our approach is that the EUR/HUF has once again exceeded the 410 mark as a result of broader movements of risk aversion in world markets plus the reduction (see graphic below on the reversal of the EUR/HUF). The exchange rate was trying to find a path back to the level of 400 gradually, with the support of a cautious language rates) by the new governor of the Central Bank.
“We have been warning that HUF high beta status makes things risky at this time – because the US administration ads are causing ad hoc oscillations in the market, which naturally impact high beta assets over all others, and Hungary inflation dynamics had already been fighting with the transmission of currency of previous months – any additional transmission of any additional transmission of Currency, even for unrelated causes, could tip the balance in the wrong direction. “
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
