The Hungarian Forint has fallen to a 30-month low dragged by the sharp dollar rally, and is now only a tad away from the post-GFC low, a break of which will push the East European currency down to its lowest since more than a decade.
The passage of a law by Hungary earlier this week that supports Russia and goes against Ukraine was in defiance with the EU stance, and therefore, Hungary may see its relation with a group of countries in bad shape.
The forint made some gains on Thursday with slight correction in the greenback and aided by the strong jump in the rate of Hungarian industrial output.
The 6 November data showed Hungary's September industrial growth at 7.6% from 0.5% in August, while analysts were expecting a rise to 2%.
On Wednesday, retail sales data too came in as a positive surprise, but failed to have any impact on the forint. The year-over-year sales growth rose to 4.5% in September, up from 2.5% in the previous month.
But it was on Wednesday the USD/HUF pair rallied to 249.37, its highest since June 2012 on an intra-month basis. When looking at the monthly closing figure, the October close itself is a high since more than a decade.
The pair hit its highest post-GFC level at 252.8 in March 2009, and it is now very close to the same level. With the Fed bracing for its first rate hike since 2006 by early next year, the forint is poised to hit record lows in the coming weeks.
The Hungarian parliament on Monday passed a low that will allow Gazprom to continue its work on the gas pipeline called South Stream, projected to deliver gas to south and central Europe via the Black Sea and the Balkans, bypassing Ukraine.
It was a pro-Russia move and in defiance of the European Union stance against the pipeline. Media reports show that Hungary has been asked to explain its action.
If this complicates Hungary's EU relations, then it will be another forint-negative.